Forecasting Accuracy

Group Participants

Ahsan Ul Haq 38416

Qurrat Ul Ain 38533

Iqra Munsif 38417

Umair Siddiqui 17858

Mashood Ul Haq 29767

 Major Areas of Forecasting
Economic Forecasting
Predicts what the general business conditions
will be in the future
Technology Forecasting
Predicts the possible future developments in
technology
Demand Forecasting
Predicts the quantity and timing of demand for
a firms products
 Forecasting method
Subjective
Qualitative ( based on opinion & Expertise of people )

Objective
Quantitative ( Mathematical and statistical )
 Qualitative Method
Customer Survey Executive
Delphi Method Committee
Consensus
-Involves a group
of Experts who -Develop long
eventually develop medium forecast by
-By using a asking a group of
a consensus
customer survey, a knowledgeable
Firm can base its Executives their
-They usually
demand forecast on opinions with regard
make long range
the customers to future values of
forecasts for future
purchasing plans the items being
technologies or
future sales of a forecasted
new product
-Dominated member
may bias the
decision
 Quantitative method
Time Series Exponential Smoothing

-This includes

*Trend
*Seasonality New Forecast = Last Periods
Forecast + (last
*Irregular variations periods demand Last
*Random variations Periods Forecast)
*CYCLE
 Importance of Forecasting
Increase customer satisfaction
Reduce inventory stock outs
Scheduling production more effectively.
Lower safety stock requirement
Reduce product obsolescence costs
Manage shipping better
How to improve Forecasting
Accuracy
 Tip 1

Set your forecast level closer to the

customers

Avoid the Bullwhip Effect

Forecasts Should be made at customer level
 Tip 2
Filter the forecasting down to exceptions

Relevant data should be considered

ABC analysis should be use for inventory
management
 Tip 3
Focus on demand forecast, not sales
forecast

Demand and supply are separate variables

Stick to Basics
 Tip 4
Identify distorted demand data

MOQ ( Minimum Order Quantity concept must

be eliminated)
Let demand drive the sales
Demand driven sales are good for long term
 Tip 5
Evaluate the forecast accuracy

Use various tools to verify your forecasting

accuracy
It is the most important part in forecasting