Looking into the future is a conundrum: it is both necessary and impossible to do with complete accuracy. From knowing what the weather will be like tomorrow to trying to decide what the stock market will do, forecasting is an activity that consumes a considerable amount of our attention because it impacts our lives so directly.
How important is forecasting to planning and decision making for a business?
Analyze the various techniques of forecasting and explain which would be appropriate or inappropriate to (a) a manufacturing enterprise, and (b) a service provider. Conclude your Discussion by identifying a model of demand management that would be well-suited to the retail food industry.
Importance of Forecasting in Planning and Decision Making
Forecasting is considered as the planning tool that helps management to cope with future uncertainty. Forecasting mainly starts with assumptions based on the experience, knowledge and judgment of managers. Forecasting fundamental to the process of planning and decision making. It has been identified that company needs plans in order to get success in its business (Cook, 2012). For making the corporate business plan, companies have to deal with business forecasts and projections. Business forecast allows the companies and its management to take effective decisions that helps in making the business development and growth.
Through forecasting, business firms can also create projections for future events and deal with the changes that occur in the business environment. With the help of forecasting, companies are able to make plan for future benefits, identify the need for inventories, make cost projections and calculate the expected profits. Forecasting is important for both planning and decision making for the business firms. Companies can use the forecasting in different areas such as product planning, budgeting, strategic planning, ...
The demand management and forecasting in business is examined. The various techniques for forecasting is determined.