Forecasting

Question 1

What is forecasting and when can you use it

Answer 1

The use of existing data to predict future trends

You can use forecasting to predict Costs, market size and sales

Question 2

What can a business do when they forecast future sales

Answer 2

The business can look at their market share and the demand for labour, marketing and training

Eg: if a business forecasts growing sales in 2 years it will need to recruit and train workers and increase supply of raw materials

Question 3

Why is qualitative forecasting and what is it based on

Answer 3

Using views and opinions to make decisions about the future

These predictions will be based on previous experience or in a systematic collection of opinions from groups like consumers

Question 4

What is the Delphi technique of qualitative forecasting and what are the steps to i

Answer 4

Infomation from experts, usually a questionnaire.

Experts are asked their opinions on the likely outcomes of a business or economic situations

After info from the first round is collected questionnaires are summarised and given back to them, then is repeated again

Over this repeating process opinions will form an average

Question 5

What is the brainstorming technique of qualitative forecasting

Answer 5

Bringing together individuals to discuss ideas for solutions to problems

It is more effective to use group discussions than individuals working alone

This is because the group has a wide range of ideas and experiences which they can build upon

Question 6

What is intuition forecasting

Answer 6

When a manager will use their “gut feeling” based on their knowledge of the business, knowledge of markets, economy and past experience

Question 7

What is sales staff forecasting, why is it useful and what types of planning is it useful for

Answer 7

Sales staff may have the most accurate view of the way the market is moving

This is because they are often in contact with ikay retailers and consumers

They can use this contact to assess the way the market is moving

Sales-staff forecasting is useful for short-term planning

Question 8

What is academic and expert forecasting and why is it useful

Answer 8

Using the opinions of academics and business experts to forecast future market changes

This can be done through meetings, academic paper research or directly approach of the experts or expert panels

Question 9

What is times series analysis

Answer 9

A method is quantitative forecasting which utilises a moving average using past data, calculated over a period of time, and projected to give forecast figures for the future

Question 10

What types of businesses is a times series analysis particularly useful and why

Answer 10

A business which has cyclical or seasonal changes in demand

The analysis will iron out variations and give a long-term trend for the data

Question 11

What are cyclical variations

Answer 11

Variations in business activity that occur as a result of the buildings cycle, and recessions and booms in the economy

Eg- a house builder may find demand for properties change with the interest rate

Question 12

What are seasonal variations

Answer 12

Changes that occur over the year

Eg- a ice cream selling will see an increase in sales in summer

Question 13

What are random fluctuations

Answer 13

Changes in sales that are difficult to predict

Eg- an ice cream seller’s sales increasing at unexpected times if the weather is warmer than normal