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Forecasting:
Forecasting is the science of predicting future events. Forecasting
may involve historical data and projecting them into future with
some sort of mathematical model.
Forecasting provide basis for planning.
Applications of Forecasting
Production:
To predict the product requirement for future.
Inventory:
To predict material requirement.
Personal:
To predict man power for production.
Feature of Forecasting
It is concerned with future event. It is a guessing of future event.
Personal observation also helps forecasting.
It is necessary for planning process.
Steps for Forecasting
Determine the use of forecast.
Select the item to be forecast.
Determine the time horizon of forecast.
Select the model of forecasting.
Gather data.
Make forecast.
Validate and implement result.
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Types of Forecasting
Short term forecasting.
Medium term forecasting.
Long term forecasting.
Short term forecasting
It is the forecasting that is made for one year
Medium term forecasting
It is for duration up to three years usually on quarterly or monthly
basis.
Long term forecasting
It is made for long term objectives covering more than five years.
Advantages of forecasting
Effective handling of uncertainty
Balanced work load
Better customer service
Better material management
Better use of production facilities
Limitations
Heavy cost and time consuming
It can’t be applied to long period
It need reliable information that is difficult to collect
It does not provide any concrete relation between past and
future events.
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Method or Categories of forecasting
Qualitative forecasting
Quantitative Forecasting
Qualitative Forecasting
These are for long term forecasting methods
These are based on human judgment, opinions and are non
mathematical
Use when situation is vague
Little data is available
New products
New technology
Quantitative Forecasting
Quantitative forecasting models are short and medium term
forecasting models
Mathematical based
Used in stable situation
Historical data is available
Existing product and current technology

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Forecasting: Forecasting is the science of predicting future events. Forecasting may involve historical data and projecting them into future with some sort of mathematical model. Forecasting provide basis for planning. Applications of Forecasting • Production: To predict the product requirement for future. • Inventory: To predict material requirement. • Personal: To predict man power for production. Feature of Forecasting It is concerned with future event. It is a guessing of future event. Personal observation also helps forecasting. It is necessary for planning process. Steps for Forecasting • • • • • • • Determine the use of forecast. Select the item to be forecast. Determine the time horizon of forecast. Select the model of forecasting. Gather data. Make forecast. Validate and implement result. Types of Forecasting • Short term forecasting. • Medium term forecasting. • Long term forecasting. Short term forecasting It is the forecasting that is made for one year Medium term forecasting It is for duration up to three years usually on quarterly or monthly basis. Long term forecasting It is made for long term objectives covering more than five years. Advantages of forecasting • • • • • Effective handling of uncertainty Balanced work load Better customer service Better material management Better use of production facilities Limitations • • • • Heavy cost and time consuming It can’t be applied to long period It need reliable information that is difficult to collect It does not provide any concrete relation between past and future events. Method or Categories of forecasting • Qualitative forecasting • Quantitative Forecasting Qualitative Forecasting • These are for long term forecasting methods • These are based on human judgment, opinions and are non mathematical • Use when situation is vague • Little data is available • New products • New technology Quantitative Forecasting • Quantitative forecasting models are short and medium term forecasting models • Mathematical based • Used in stable situation • Historical data is available • Existing product and current technology Name: Description: ...
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