Question

You are starting the production of the Habibi pastry and you need to find how many muffins your pastry should produce in the first 6 months. Which forecasting method would you choose to use in this case? Justify your choice.

Answer 1

Qualitative forecasting method would be appropriate in this case because there is no historical data that can be used for making quantitiative forecasts. In the absence of historical data, it would be best to employ qualitative forecasting techniques such as judgement, historical analogy, market research, focus group that will help in obtaining a reasonable estimate of the number of muffins to be produced in the first 6 months.

In qualitative forecasting, the judgement of an expert can play a pivotal role in obtaining estimation of sales. The expert will be someone from the same industry who has vast experience in the field and can make accurate sales estimation judgements.

Historical analogy helps in making comparison among other ventures who are in the same industry. The sales made by previously started firms in the first 6 months can help in arriving at an estimation of sales.

Market research involves conducting reserch studies to estimate the market demand and to arrive at the estimated sales value.

Focus group involves a set of people who are individually asked for arriving at the sales estimate and the group members are allowed to make discussion to arrive the estimated sales value. This technique is useful when introducing a new product into the market.