What is Forecasting?
The word forecasting means to predict a future event. It is very necessary for industries for forecasting manufacturing components.
Forecasting is the process of producing predictions of the future based on past and present data and most commonly by analysis of trends.
What is the need for Forecasting?
- The majority of the activities of the industries depend upon future sales.
- To register the production activity to ensure optimum utilization of the plant’s capacity.
- To provide information about the relationship between demand for a different product.
- To prepare material planning to take up replenishment action to make the materials available at the right quantity and right time.
How to do Forecasting?
Below are the commonly used techniques in business and industries. This depends upon on experience of the person and skill.
Opinion Survey method
Opinion method is an almost simple and practicable method for forecasting for new products. In this method, opinions are collected from prospective buyers regarding, why they buy a particular product, what they expect from the product.
Executive opinion method
In this process, the experts’ opinion is sought on the future demand for the product. It is biased and subjective as it not backed by any scientific method or any statistical data.
If the product is entirely new to the customer or market then it is very difficult to know the acceptability of the product by the market. In this case, it is advisable to expose the product to a limited market trial.
This method can be used for new products or exiting products. Usually, the work is assigned to external marketing agencies. This is recommended if extensive data is needed.
To make the judgmental forecasting more realistic by minimizing bias Delphi technique recognized.
In this method, a panel of experts is asked sequential questions in which the response to one questionnaire is used to produce the next questionnaire.
Through this series of exchanged views, the consensus is reached