Question

1) Once we have a forecasting model, the specific units of measurement used in the model are

            A) expressed in units of production for long-range plans.

            B) expressed in units of production to determine future requirements for plant and equipment.

            C) the same for every area of the business.

            D) expressed in job descriptions for human resource planners.

            `E) All of the above are correct

Answer 1

Solution :-

1) Once we have a forecasting model, the specific units of measurement used in the model are

B) expressed in units of production to determine future requirements for plant and equipment.

Explanation :-

Forecasting forms the basis of planning. A forecast is a quantifiable estimate of future demand. Forecasting is essentially the study of external & internal forces that shape demand & supply. Forecasting in business is the estimation of future demand for products & services. Firms that do forecasting have usully higher success rate than the firms that don't.
The process of forecasting involves several basi steps. They are :-

• Determine the type of forecasting model to be used.
• Determine the forecast horizon.
• Select one or more forecasting models.
• Evaluate the models.
• Apply the chosen model.
• Monitor and control the model.

A particular forecasting model is developed and applied to the business in order to find out the future requirements of the business.
Application of the model and the specfic units of measurement it uses depends upon the area of the business for which the model is being used.

• Long range general business plans are typically expressed in terms of dollar.
• Producion planning requires that these plans be expressed in units of production to determine the future requirements for plant, equipment & personnel.
• Personnel & production planners require the forecast to be broken down into human resource personnel requirements.
• The financial planner determine the cost of obtaining the required financing to support all of the various plans with the help of forecasting.

Using a forecasting model often requires a firm to develop several functional business plans to support the forecast.