We shall illustrate the use of the various techniques from our experience with them at Corning, and then close with our own forecast for the future of forecasting.Īlthough we believe forecasting is still an art, we think that some of the principles which we have learned through experience may be helpful to others. Our purpose here is to present an overview of this field by discussing the way a company ought to approach a forecasting problem, describing the methods available, and explaining how to match method to problem. The availability of data and the possibility of establishing relationships between the factors depend directly on the maturity of a product, and hence the life-cycle stage is a prime determinant of the forecasting method to be used. ![]() This kind of trade-off is relatively easy to make, but others, as we shall see, require considerably more thought.įurthermore, where a company wishes to forecast with reference to a particular product, it must consider the stage of the product’s life cycle for which it is making the forecast. If the forecaster can readily apply one technique of acceptable accuracy, he or she should not try to “gold plate” by using a more advanced technique that offers potentially greater accuracy but that requires nonexistent information or information that is costly to obtain. In general, for example, the forecaster should choose a technique that makes the best use of available data. These factors must be weighed constantly, and on a variety of levels. The selection of a method depends on many factors-the context of the forecast, the relevance and availability of historical data, the degree of accuracy desirable, the time period to be forecast, the cost/benefit (or value) of the forecast to the company, and the time available for making the analysis. ![]() ![]() The manager as well as the forecaster has a role to play in technique selection and the better they understand the range of forecasting possibilities, the more likely it is that a company’s forecasting efforts will bear fruit. Each has its special use, and care must be taken to select the correct technique for a particular application. To handle the increasing variety and complexity of managerial forecasting problems, many forecasting techniques have been developed in recent years.
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