Presented by

Nazrin Jamal
3 rd Sem IF CUSAT
 Method or technique for estimating many future
aspects of a business or other operation.
 It is used in the practice of customer demand
planning in every day business forecasting for
manufacturing companies.
There are three types of forecasting
1.Qualitative or Judgmental methods
2.Extrapolative or Time series methods
3.Causal or Explanatory methods
 Rely on experts or managers opinion in making
prediction for the future.
 Useful for medium to long range forecasting tasks.
 Provide a basis for some important decisions.
Three important Qualitative methods are :-
 Delphi Technique - Develop forecast through group
consensus.
 Market Surveys – Involves the use of questionnaires,
consumer panels & tests of new products & services.
 Scenario Writing - process of analyzing possible
future events by considering alternative possible
outcomes.
 Use past history of demand.
 Comprised of four separate components: trend
component, cyclical component, seasonal component,
and irregular component.
 The objective of this method is to identify the pattern
in historic data & extrapolate this for future.
TYPES OF EXTRAPOLATIVE METHODS
 Moving Average Method - average of demands
occurring in several of the most recent periods.
 Weighted Moving Average - allows for varying
weighting of old demands.
 Exponential Smoothing – exponentially decreases the
weighting of old demands.
 A statistical forecasting model based on historical
demand data as well as on variables believed to
influence demand.
 There are two types of Causal forecasting methods
 Regression analysis - a functional relationship is
established between variables from the historical data
and then used to forecast dependent variable values.
 Econometric method – an extension of regression
analysis and include a system of simultaneous
regression equations.
THANK YOU