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Forecasting techniques,factors in selection of forecast

Understanding Forecasting Techniques

Introduction: All firms conduct their activities in an uncertain environment and use forecasting techniques to reduce this uncertainty. The challenge facing a forecaster is choosing the right technique. However, forecasting is not a substitute for managerial decision-making; it simply acts as an aid to the process.

Task: Do you agree with the above statement?

Begin your discussion as follows:
State why you agree or disagree with this statement. Suggest the prerequisites of a good forecast.
Review the postings of at least two other students. Do you agree that managers need to develop realistic expectations from forecasting?

Solution Preview

All firms conduct their activities in an uncertain environment and use forecasting techniques to reduce this uncertainty. The challenge facing a forecaster is choosing the right technique. However, forecasting is not a substitute for managerial decision-making; it simply acts as an aid to the process.

Forecasting is the estimation in the unknown circumstances or unknown condition. The following techniques can be used:

1. Time series analysis: In Time series analysis, the historical data for future decision making. Here, like extrapolation, moving average ...

Solution Summary

The answer contains the explanation regarding simulation, time series, factors to be considered in the selection of forecasting technique and prerequisites of good forecast.

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