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Forecasts

It is the art and science of predicting events futures, such a prediction may be a subjective or intuitive prediction or a mixture of both.

Definition

Features

• Forecasts are almost always wrong.

• Forecasts are more accurate for groups or families of items.

• The accuracy of forecasts increases when they are made for short periods.

• Every forecast must include an estimation error.

• Forecasts are not a substitute for calculated demand.

Forecast time horizon

Short term prognosis

is considered a short-term prognosis when the Forecast horizon ranges from 1 year to 3 months or less. Used to planning purchases, scheduling work, determining labor levels, assign work, and decide production levels.

Medium-term forecast

Its horizon is intermediate has a term of 3 months to 3 years. It is used to plan sales, production, budget and cash flow, as well as to analyze different operating plans.

Long term prognosis

Almost always its length is 3 years or more. The long-term forecasts are used to plan the manufacture of new products, capital expenditures, location or expansion of facilities, and for Investigation and development.

Classification

qualitative forecasts

These incorporate factors such as intuition, the emotions, personal experiences and value system of the drinker decisions to arrive at a forecast.

Models

• Cumulative techniques

• Market research

• Consensus groups

• Historical analogy

• Delphi method

quantitative forecasts

use a variety of mathematical models that rely on historical data and / or causal variables to forecast the demand.

Models

time series model

• Intuitive approach

• Simple moving average

• Weighted moving average

• Exponential smoothing

• Trend projections • Regression analysis