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    Production and Operation Management

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    Harshit Y
    The document discusses various methods and importance of forecasting for production and operations management. It provides an overview of different types of forecasting including economic, technology, demand and qualitative versus quantitative methods. Key points covered include that forecasting is a critical planning tool, involves estimating future events based on past data, and can be done using various techniques like surveys, salesforce composites, executive opinions and Delphi method. Accurate forecasting is important for effective management and operations.

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    Production and Operation Management

    Uploaded by

    Harshit Y
    43 views16 pages
    The document discusses various methods and importance of forecasting for production and operations management. It provides an overview of different types of forecasting including economic, technology, demand and qualitative versus quantitative methods. Key points covered include that forecasting is a critical planning tool, involves estimating future events based on past data, and can be done using various techniques like surveys, salesforce composites, executive opinions and Delphi method. Accurate forecasting is important for effective management and operations.

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    The document discusses various methods and importance of forecasting for production and operations management. It provides an overview of different types of forecasting including economic, technology, demand and qualitative versus quantitative methods. Key points covered include that forecasting is a critical planning tool, involves estimating future events based on past data, and can be done using various techniques like surveys, salesforce composites, executive opinions and Delphi method. Accurate forecasting is important for effective management and operations.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    43 views16 pages

    Production and Operation Management

    Uploaded by

    Harshit Y
    The document discusses various methods and importance of forecasting for production and operations management. It provides an overview of different types of forecasting including economic, technology, demand and qualitative versus quantitative methods. Key points covered include that forecasting is a critical planning tool, involves estimating future events based on past data, and can be done using various techniques like surveys, salesforce composites, executive opinions and Delphi method. Accurate forecasting is important for effective management and operations.

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    © All Rights Reserved
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    Download as pptx, pdf, or txt
    of 16

    Production and Operation Management

    FORECASTING AS A PLANNING TOOL. FORECASTING


    TYPES AND QUALITATIVE METHODS OF FORECASTING.

    PRESENTED to :- PRESENTED BY :-

    Dr. Shivani Sharma Abhishek Agarwal {2}


    Prabal Parashar {41}
    Rounak Goreja {47}
    Sejal Gupta {53}

    1
    INTRODUCTION:

    Forecasting is the technique of estimating the relevant future events and problems on the
    basis of past and present behavior or happenings.

    Forecasting depends upon an analysis of past events and current conditions.

    Forecasting is a systematic guessing of the future course of events.

    Forecasting provides a basis for a planning.

    According to fayol, forecasting includes both assessing the future and making provision for
    it.
    WHAT IS
    FORCASTING?

    Webster's new collegiate dictionary defines that, “A forecast is a prediction and its
    purpose is to calculate and predict some future events or condition.”

    In simple terms forecasting means, “estimation or prediction of future”. The prediction


    of outcomes, trends, or expected future behavior of a business, industry sector, or the
    economy through the use of statistics. Forecasting is an operational research technique
    used as a basis for management planning and decision making.
    FORCASTING AS A PLANNING TOOL:

     Forecasting is a planning tool that helps management in its attempts to cope with the uncertainty of the
    future, relying mainly on data from the past and present and analysis of trends.
     Since planning involves the future, no usable plan can be made unless the manager is able to take all
    possible future events into account. This is why forecasting is a critical element in the planning process.
     In fact, every decision in the organization is based on some sort of forecasting .
    FEATURES OF FORECASTING:

    It is concerned with future events.


    It is necessary for planning process.
    It is a guessing of future events.
    It considers all the factors which affect organizational functions.
    Personal observation also helps forecasting.
    CLASSIFICATION OF FORECASTING:

    Economic Forecasting: These forecasting are related to the broader macro-economic and micro-economic
    factors prevailing in the current business environment. It includes forecasting of inflation rate, interest rate,
    GDP, etc.

    Technology Forecast: This type of forecast is used to forecast future technology upgradation. It is the
    prediction of the future characteristics of useful machines, products, processes, procedures or techniques .

    Demand Forecast: Organization conduct analysis on its pre-existing database or conduct market survey
    as to understand and predict future demands. Operational planning is done based on demand forecasting .
    “
    PROCESS OF FORCASTING:

    1. Thorough preparation of foundation: The very purpose of thorough preparation of a


    foundation is that the forecasting is based on the foundation.

    2. Estimation of future: The brightness of future period can be estimated in consultation


    with the key personnel & it may be communicated to all the employees of the business unit.

    3. Collection of results: Relevant records are prepared & maintained to collect the result.
    4. Comparison of results: The actual results are compared with estimated results to know
    deviations. This will help the management to estimate the future .

    5. Refining the forecast: The forecast can be refined in the light of deviations which seem to
    be more realistic.
    Elements Of Good Forecasting:

    The forecast should be timely.


    The forecast should be accurate and the degree of accuracy should be stated.
    The forecast should be reliable; it should work consistently.
    The forecast should be expressed in meaningful units.
    The forecast should be in writing.
    The forecasting technique should be simple to understand and use.
    The forecast should be cost effective.
    IMPORTANCE OF FORCASTING:

    Pivotal role in an organization.


    Development of a business,
    Co-ordination.
    effective control.
    Key to success.
    Implementation of project.
    Primacy to planning.
    ADVANTAGES AND
    DISADVANTAGES OF FORCASTING:

    ADVANTAGES: DISADVANTAGES:

    1. Forecasts are never 100% accurate.


    1. Helps Predict the Future.
    2. It can be time-consuming and resource-intensive.
    2. Good for Customers.
    3. It does not specify any concrete relationship
    3. Keeps a Company Up-to-date.
    between past and future events.
    4. Learn from Past Experience.
    4. It requires high degree of skill.
    5. Stay on Top of Costs.
    5. It can also be costly
    METHODS OF FORCASTING:

    There are numerous methods to forecasting depending on the need of the decision-maker. These
    can be categorized in two ways:
    1.Opinion and Judgmental Methods or Qualitative Methods.
    2.Time Series or Quantitative Forecasting Methods.

    Quantitative Forecasts Uses one or more mathematical models that rely on historical data
    and/or causal variable to forecast demand.

    Qualitative Forecasts Uses such factors like decision makers intuition, emotions, personal
    experiences, and value system.
    CUSTOMERS SURVEY:
    This method uses input from customers or potential customers regarding future purchasing plans.
    It can help not only in preparing a forecast but also in improving product design and planning for new products.
    Surveys may consist of telephone contacts, personal interviews, or questionnaires as a means of obtaining data.

    SALESFORCE COMPOSITE:
    In this method, the forecast is done based on the opinions of salespeople who have steady interactions with the
    clients.
    Companies believe that the salespeople who are closest to the ultimate customers may have significant insights
    regarding the state of the future market.
    This forecasting method is that it is very simple to use and understand. The information can be segregated easily Into
    different categories.

    EXECUTIVE OPINIONS:
    The subjective views of executives or experts from sales, production, finance, purchasing, and administration are
    averaged to generate a forecast about future sales.
    The forecasting is done quickly and easily, without need of elaborate statistics.
    DELPHI METHOD:
    This is a group technique in which a panel of experts is questioned individually about their perceptions of future
    events. The experts do not meet as a group.
    The forecasts and accompanying arguments are summarized by an outside party and returned to the experts along with
    further questions.
    For long-range forecasting, this method is beneficial and very effective .

    PAST ANALOGY:
    For forecasting the sales of a new product, an analogy of the sales growth trends of Other existing products may be
    taken
    These products may be substitutes of the new product,
    Complementary products, or products related to consumers belonging to income groups similar to that
    being targeted by the new product.
    CONCLUSION

    “
    -Forecasting involves detailed analysis of the past and present
    events to get a clear idea about probable events in future.

    -Forecasting is an integral part of planning process.

    -It requires high degree of skill.

    -Forecasting can be done by various methods.

    -Accurate forecasting is necessary for efficient management.


    THANK
    YOU

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