Forecasting Methodology
Forecasting is an integral part in planning the financial future of any business and allows the company to consider probabilities of current and future trends using existing data and facts. Forecasts are vital to every business organization and for every significant management decision. Forecasting, according to Armstrong (2001), is the basis of corporate long-run planning. Many times, this unique approach is used not only to provide a baseline, but also to offer a prediction into the corporation's future. In the functional areas of finance and accounting, forecasts provide the basis for budgetary planning and cost control. Marketing relies on sales forecasting to plan new products, compensate sales personnel, and make other key decisions. Production and operations personnel use forecasts to make periodic decisions involving process selection, capacity planning, and facility layout, as well as for continual decisions about production planning, scheduling, and inventory. Planning problems, whether dealing with services or merchandise, can cause any manager headaches easily solved by forecasting. It is important that any manager realizes that the past is a key to the future. Although no long-term plan is perfect, using the correct forecasting tool, along with continual evaluation, allows the manager to review and update corporate financial plans.
Most people view the world as consisting of a large number of alternatives. Futures research evolved as a way of examining the alternative futures and identifying the most probable. Forecasting is designed to help decision making and planning in the present. Forecasts empower people because their use implies that we can modify variables now to alter (or be prepared...
... middle of paper ...
...great management tool which provides the necessary raw material for budgeting.
Reference
Chase, Jacobs, & Aquilano. (2005). Operations Management for Competitive Advantage (11th
ed.). New York: McGraw-Hill. Retrieved October 11, Y2007ear, from University of
Phoenix, Week Three, rEsource. Operations Management Web site.
Global Insight. (2007). Global Leader in economic and financial analysis, forecasting and
market intelligence. Retrieved October 12, 2007, from http://www.globalinsight.com/
Arsham H., (1994 ). Time-Critical Decision Making for Business Administration. Time Series
Analysis for Business Forecasting. Retrieved October 10, 2007, from
http://home.ubalt.edu/ntsbarsh/stat-data/Forecast.htm
Armstrong J. Scott (ed.) (2001). Principles of forecasting: a handbook for researchers and
practitioners). Norwell, Massachusetts: Kluwer Academic Publishers.
The forecasted balance sheets, income statements and assumption provided to Goldengate Capital by Ernst and Anderson are shown in Exhibits. All dollar figures quoted are in thousands. The financial forecasts are conservative case sales estimates from Dr. Martinez. The three main factors considered in the estimates were case sales trends & demand, inflation and real price increases reflecting Calaveras' strengthening brand recognition.
Finally, I will do a financial forecast in order to figure out firms’ ability to repay its loans. I will use simple percentages-of-sales forecasting technique. I will use existing trends in my forecast to show the implications of current policies before making my own recommendations. During my forecast I will use New Era Partners loan to find out the interest rates. I will make the short-term debt as my plug.
Addressing the trials of operating in a continually changing environment and realizing forecasts can only
Management experience will also play a large role in the success of the forecast. The current team is quite new and will gain some needed experience over the next year in the hopes of staying on track for success. The ability of management to ensure product is readily available for the client, their training techniques with new and seasoned associates, and general management style will ensure success or spell defeat for the store.
54). The first step in forecasting is to develop the opportunity or threat with different alternative conclusions, which is most useful when using a brainstorming method (Ginter et al., 2013, p. 54). In addition, there is a need to identify the associations between the tendencies, changes, predicaments, and or likelihood of events and the environmental categories (Ginter et al., 2013, p. 54), such as the judicial/political environment of the Affordable Care Act. In doing so, it will allow management to see the possibilities of how these issues can affect the future of the company. In turn, this allows the management team to build a better strategic plan, so that the healthcare business has longevity in the fast-paced environment. However, one must assess all the information proposed from the scanning, monitoring, and forecasting of the potential threats or opportunities to the healthcare
... demand as a function of marketing variables, such as price or promotion. These involve building specialized forecasts such as market response models or cross price elasticity estimates to predict customer behavior at certain price points. By combining these forecasts with calculated price sensitivities and price ratios, a Revenue Management System can then quantify these benefits and develop price optimization strategies to maximize revenue.
Target Corporation needs to increase product availability based on the customer needs using a forecasting and supply chain
Rees, J. (2012). Prescriptive strategic planning in the current economic climate and possible alternative approaches. 1-6.
To maximize optimum performance of our investment portfolio, we placed a certain percentage of equity in different sectors of the stock market.
...om product forecasting exercise, this will help customers in getting a better deal from suppliers (Mellahi, K., Johnson, M., 2000).
It has to be analyzed the company's performance, forecast fund needs and make a recommendation. The case introduces the pattern of current assets and cash flows in a seasonal company and provide and elementary exercise in the construction of the pro forma financial statements and estimation of fund needs.
Choosing two profitable stocks amongst a myriad of potential alternatives is a daunting task to say the least. In order to narrow my choices from thousands to two, I examined several aspects of companies I was interested in. Among these were, company overview, alpha and beta ratings, price ratios, price charts, and company headlines. After evaluating this information, I chose Intuit INC (INTU) listed on the NASDAQ and Johnson and Johnson (JNJ) listed on the NYSE.
Inventory Management has developed as an important fact in organizational efforts to reduce losses. The management of capital within an organization has a significant impact towards profits where inventories are commonly an organization’s largest asset. Inventory Management behaviors impact the sales forecast, operation and sales planning, production planning, inventory rotation and material requirement planning.
Business forecasting can be used in a wide variety of contexts, and by a wide variety of businesses. For example, effective forecasting can determine sales based on attendance at a trade show, or the customer demand for products and services (Business and Economic Forecasting, p.1). One of the most important assumptions of business forecasters is that the past acts as an important guide for the future. It is important to note that forecasters must consider a number of new information, including rapidly changing economic conditions and globalization, when creating business forecasts based on past sales.
... the future and as many have stated, including Joel Barker (2009), “the best way to predict the future is to create it yourself.”