Forecasting: a tool for Companies' decision making

Résumé du document

From the bible and the predictions of God to the Oracle of Delphi, Merlin or the Chinese I-ching people have been always fascinated in knowing the future and predicting it. Those lights opened on the future were used to prevent the change of climate in the prehistoric times or to determine if it was the ideal moment to go to make war with their enemies like Greeks against Persians. As time passed the fascination for the future remained unchanged and is nowadays, thanks to the evolution of technology, more accurate. Our present is constantly changing with the arrival of cell phones, internet and other technologies. As a matter of fact our ambition of knowing the future has increased to become a necessity for everyone and every organization. Born in the late 60's with the discovery of computers, forecasting appears like the response to everybody issues. According to Russel & Taylor - Operations Management (sixth edition) is "the art and science of predicting future events?. Different methods have been found to match the different demands of companies, customers or other organizations.

Extraits

[...] Forecast are made for a durable time from more than 2 years to 15 years and are used by big companies to launch new products, prepare capital expansions plans and select R&D projects. Long term forecasting are even harder than middle term schedule to prevent from uncertainty and changes as the end of the forecast is too far away from the present. New products could come out in the future like Ipod Touch and change the relationship of the data in the forecast of an Mp3 for example. [...]

[...] Finally that short-term forecast uses a different approach than longer-term forecasting with mathematical methods like: moving average, exponential smoothing, and trend extrapolation. As the time horizon increases, so does the difficulty of arriving at accurate forecasts and reliable estimates of uncertainty, as well as the challenge of planning rationally and formulating successful strategies Forecasting, planning and strategy for the 21st century - Spyros G. Makridakis. Medium term forecasting are realized from less than one year to two years and as short term schedule it is used in general for economic situation in organizations. [...]

[...] Our present is constantly changing with the apparition of cell phone, internet and other technologies. As a matter of fact our ambition of knowing the future has increased to become a necessity for everyone and every organization. Born in the late 60's with the discovery of computers forecasting appears like the response to everybody issues. According to Russel & Taylor - Operations Management (sixth edition) is the art and science of predicting future events Different methods have been made to match the different demands of companies, customers or other organizations. [...]

[...] The most forecasting employment nowadays is based on facts and information derived from theses facts which lead to scientific decision making. Past trends is the guide to understand the future Business forecasting for management - Branco Pecar To achieve that you have to use relatively complex mathematical methods which needs adequate data and an accurately interpretation of the results. You have several quantitative or qualitative possibilities which when implemented will produce the result of the forecast. Different methods of forecasting still exist; you have to choose the right one for the best forecast. [...]

[...] Forecasting can depend also on demand behavior which is a factor which changes with time. It is influenced by different elements which are the trend, the random variations, the cycle and the seasonal pattern. The trend is changing all the time, rapidly or slowly until the next invention or clothes. The demand for the new Nike shoes is changing every 3 months until the coming out of a new one. The role of the forecast is here to determine when and how that trend will appear or disappear to help the company making benefits from the situation. [...]