forecasting

Forecasting
4

© 2014
© 2014
Pearson
Pearson
Education,
Education,
Inc.Inc. 4-1

, What is Forecasting?
► Art and science of
predicting future

►
events.
Underlying basis
??
of all business
decisions
► Production
► Inventory
► Personnel
© 2014 Pearson Facilities
► Education, Inc. 4-2

, Forecasting Time Horizons
1. Short-range forecast
► Up to 1 year, generally less than 3 months
► Purchasing, job scheduling, workforce levels,
job assignments, production levels
2. Medium-range forecast
► 3 months to 3 years
► Sales and production planning, budgeting
3. Long-range forecast
► 3+ years
► New product planning, facility location,
research and development
© 2014 Pearson Education, Inc. 4-3

, Distinguishing Differences
1. Medium/long range forecasts deal with more
comprehensive issues and support
management decisions regarding planning
and products, plants and processes
2. Short-term forecasting usually employs
different methodologies than longer-term
forecasting
3. Short-term forecasts tend to be more
accurate than longer-term forecasts


© 2014 Pearson Education, Inc. 4-4