Business Forecasting

DEEPAK KUMAR
MBA 3RD SEM.
RAI BUSINESS SCHOOL
 Business forecasting

 Forecasting is the process of making

statements about events whose actual
outcomes have not yet been observed.
 Example might be estimation of some
variable of interest at some specified future
date.
 Prediction is a similar, but more general term.
The data must be up to date in order for the
forecast to be as accurate as possible.
NEED OF FORECASTING:-

 Forecasting is the process by which

companies ponder and prepare for the future.

 It involves predicting the future outcome of

various business decisions.

 It also helps the organization make plans that

will lead to becoming a financially successful
business.
 Businesses must understand and use
forecasting in order to answer these important
questions. This helps the company prepare for
the future.
Forecasting is used to answer important
questions, such as:
 How much profit will the business make?
 How much demand will there be for a product
or service?
 How much will it cost to produce the product
or offer the service?
 How much money will the company need to
borrow?
Various types of Forecasting:-
 There are a number of different methods by
which a business forecast can be made.

 There are many quantitative methods:-

for example Time Series Forecasting,
Regression Forecasting, etc.

 Then there are many qualitative methods :-

(judgmental methods) such as Delphi
Method, Expert Decision.
THE FORECASTING PROCESS:-
Time series Analysis?

 A time series is a collection of observations of

well-defined data items obtained through
repeated measurements over time.
For example, measuring the value of retail sales
each month of the year would comprise a time
series. This is because sales revenue is well
defined, and consistently measured at equally
spaced intervals.
 Data collected irregularly or only once are not
time series.
Time Series – Examples

 Stock price, Sensex

 Exchange rate, interest rate, inflation
rate, national GDP
 Retail sales
 Electric power consumption
 Number of accident fatalities
IMPORTANCE OF TIME SERIES
ANALYSIS
 A very popular tool for Business Forecasting.

 Basis for understanding past behavior.

 Can forecast future activities/planning for

future operations

 Evaluate current accomplishments/evaluation

of performance.
CONT’D
 The basis of Time series Analysis
businessman can predict about the changes
in economy.
 Safety from future
 Sales Forecasting
 Budgetary Analysis
 Stock Market Analysis
 Risk Analysis & Evaluation of changes.
 Census Analysis