VILLANUEVA, MAY JOY M.

CBME:ACTIVITY 7
BSA-1E
1.) Outline the steps in the forecasting process.
1. Determine the purpose of the forecast
2. Establish a time horizon
3. Obtain, clean, and analyze appropriate data
4. Select a forecasting technique
5. Make the forecast
6. Monitor the forecast errors

2.) Summarize forecasts errors and use summaries to make decisions.

 Forecast error is the difference between the actual or real and the
predicted or forecast value of a time series or any other phenomenon
of interest. By convention, the error is defined using the value of the
outcome minus the value of the forecast.
 Error = Actual – Forecast
 MAD = Mean absolute deviation = weights all errors evenly
 MSE = Mean squared error = weights errors according to their squared
value
 MAPE = Mean absolute percent error = weights errors according to
relative error
 All deal with magnitude of error
 Bias
 deals with direction of error terms

3.) Why is sales force opinions important in creating forecasts.

 Sales Force opinions are important in creating forecasts because it
helps business get a better grasp on how you’ll make from sales over a
defined time period. It also facilitates the breaking down of the sales
forecast into specific products and markets and gives the sales team
more confidence in meeting their quota.