Question

The company is considering introducing a new flavor: passion fruit. This flavor is quite different to Dilettos’ current offering. That’s why the company won’t be able to use any historical data to estimate how much passion fruit’s ice cream is needed.

What are the forecasting methods that Diletto can use in this case?

Check all that apply

Survey current and potential customers about their preference to consume the new ice cream’s flavor (market research)

Sales force composite

Moving average

Holt’s method

Composite forecast prepared by a number of company’s executives (jury of executive opinion)

None of the above

Answer 1

Its important to understand the kinds of forecasting methods in the most simplest of ways.

There are two kinds of forecasting methods: Qualitative & Quantitative Methods

Qualitative Methods - Purely based on judgements either of experts or a collective judgement of knowledgeable people in the industry or even of potential customers. It is based on information that can't be measured i.e no historical data is available yet. One has to start from scratch.

Hence, out of the various methods of the above kind, the Sales Force Composite Method, the Market Research Method (also known as Users Expectation/Opinion Method) & the Jury of Executive Opinion Method should be used for the above question.

Reasons to justify the answer: The focal point of the question is that no historical data is available to the company. The way forward is to collect data by conducting surveys & research using their established customer base, approaching new potential customers (there is the possibility that they might have consumed the said product elsewhere and ergo, might have inputs) & experts' opinions.

Reasons to rule out the other options namely Moving Average Method & the Holt's Method: They are the Quantitative Methods of Forecasting.

Quantitative Method- The method uses information that is already available as it requires hard data and number crunching. Past data is used to forecast sales of a product. Hence, the two Quantitative Methods of Moving Average & Holt's  can't be used for situations where data isn't available at all.

ANSWER SUMMARY: The Qulitative Methods i.e. 1) Sales Composite Forecast 2)Jury of executive Opinion 3) Market Research are to be used by the company Diletto as they haven't any historical data available.