Business Forecasting

DEEPAK KUMAR MBA 3RD SEM. RAI BUSINESS SCHOOL

Business forecasting
Forecasting is the process of making

statements about events whose actual outcomes have not yet been observed. Example might be estimation of some variable of interest at some specified future date. Prediction is a similar, but more general term. The data must be up to date in order for the forecast to be as accurate as possible.

NEED OF FORECASTING: Forecasting is the process by which

companies ponder and prepare for the future.

It involves predicting the future outcome of

various business decisions.

It also helps the organization make plans that

will lead to becoming a financially successful business.

 Businesses must understand and use forecasting in order to answer these important questions. This helps the company prepare for

the future. Forecasting is used to answer important questions, such as: How much profit will the business make? How much demand will there be for a product or service? How much will it cost to produce the product or offer the service? How much money will the company need to borrow?

Various types of Forecasting: There are a number of different methods by

which a business forecast can be made.

There are many quantitative methods:-

for example Time Series Forecasting, Regression Forecasting, etc.

Then there are many qualitative methods :-

(judgmental methods) such as Delphi Method, Expert Decision.

THE FORECASTING PROCESS:-

Time series Analysis?

A time series is a collection of observations of well-defined data items obtained through repeated measurements over time. For example, measuring the value of retail sales each month of the year would comprise a time series. This is because sales revenue is well defined, and consistently measured at equally spaced intervals. Data collected irregularly or only once are not time series.

Time Series Examples

Stock price, Sensex Exchange rate, interest rate, inflation rate,

national GDP Retail sales Electric power consumption Number of accident fatalities

IMPORTANCE OF TIME SERIES ANALYSIS

A very popular tool for Business Forecasting.

Basis for understanding past behavior.

Can forecast future activities/planning for

future operations
Evaluate current accomplishments/evaluation

of performance.

CONTD
The basis of Time series Analysis

businessman can predict about the changes in economy. Safety from future Sales Forecasting Budgetary Analysis Stock Market Analysis Risk Analysis & Evaluation of changes. Census Analysis