Question

Conduct the appropriate research and compare and contrast forecasting techniques. Discuss your findings in 150 to 180 words.

Answer 1

Different forecasting techniques consist of the naïve approach, Delphi technique, time series forecasting and several others. A forecasting technique can be a qualitative method or a quantitative method. Popular qualitative methods are Delphi method, customer surveys and sales force composite. In the Delphi method a group of experts are involved who eventually develop a consensus. Long range forecasts are developed in this method. Customer surveys are used by organizations to forecast demand.

Popular quantitative methods include time series models and casual models. In time series model the independent variable is the time and the models are used to determine trends, seasonal factors and cyclical factors when forecasting. Casual models employ some factors other than time when doing forecasts.

Time series models can further be sub-divided into smoothing models (moving average, single exponential smoothing) and decomposition models (additive models and multiplicative models).

Forecast accuracy tends to be higher in case of quantitative methods than in case of qualitative methods. In case of quantitative methods the quantum of forecast bias and forecast error is much lower than in case of qualitative methods.

(180 words)