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Business Forecasting Chapter 1 Forecasting for Management Decisions

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Business Forecasting. Chapter 1 Forecasting for Management Decisions. Chapter Topics. Introduction Importance of Forecasting Financial and Strategic Importance of Forecasting The Commonality of Forecasting. Importance of Business Forecasting. Allows organizations to improve profits - PowerPoint PPT Presentation

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Page 1: Business Forecasting

Business Forecasting

Chapter 1Forecasting for Management

Decisions

Page 2: Business Forecasting

Chapter Topics

Introduction Importance of Forecasting Financial and Strategic Importance of

Forecasting The Commonality of Forecasting

Page 3: Business Forecasting

Importance of Business Forecasting

Allows organizations to improve profits Essential in eliminating waste such as:

Inventory shortages Missed due dates Plant shut-downs Lost sales Lost customers Expensive expediting Missed strategic opportunities.

Page 4: Business Forecasting

Financial and Strategic Importance

Better strategic information Better marketing information Better financial information Better operating information Increased customer service Better allocation of resources

(Continued)

Page 5: Business Forecasting

Financial and Strategic Importance

Increased manufacturing and operating efficiency

Higher productivity Stability in planning Reduced finished goods inventory Elimination of waste Increased profitability Increased return on investment.

Page 6: Business Forecasting

The Commonality of Forecasting

All organizations wish for excellence in management (whether manufacturing or a hospital).

Demand for products, labor, materials, and other resources must be estimated using either formal or informal forecasting methods.

Page 7: Business Forecasting

Business Forecasting

The Art and Science of Forecasting

The Forecasting Process

Page 8: Business Forecasting

Business Forecasting Process

No

Figure 1.1 The Forecasting Process

Feed

back

Loo

p

Yes

Management’s Question/Problem

Data Gathering

Model Formulation

Design the Forecasting Experiment

Analysis and Interpretation

Valid Results?

Report Results

Page 9: Business Forecasting

Chapter Summary

Importance of Business Forecasting As a Strategic Tool Planning and Control Tool

Various Application of Forecasting in Business

The Art and Science of Forecasting

The Process of Forecasting