1.

Describe the different types of qualitative and quantitative methods of

inventory forecasting.

Quantitative forecasting uses mathematical algorithms to predict future

performance using historical demand data. For this reason, statistical demand
forecasting is another name for it. Data sets can be based on consumption from a
few weeks ago, for the past year, or going back decades.

Time series analysis

Perhaps the most used statistical demand forecasting model is time series 
analysis. In order to predict future behavior, it looks at trends in past behavior t
hroughout time. Two primary types are employed in quantitative forecasting:

Moving average forecasting: This takes a previous period’s demand data (e.g. four
weeks of sales data) and calculates the average demand over that period (average
sales per week) then uses this average as the forecast amount for the coming
period.

Exponential smoothing: This more advanced approach overcomes the problems

above. Exponential smoothing looks at the actual demand of the current period
and the forecast previously made for the current period. These observations are
exponentially weighted to decrease over time to produce a forecast for the
upcoming period.

Statistical forecasting using only historic consumption data works well if you sell or

produce the same amount of each item in every period.

Qualitative forecasting models are based on opinions, past experience and,

sometimes, best guesses. With qualitative demand forecasting, predictions are

based on expert knowledge of how the market works. These insights could come

from one person or multiple people both internally and externally to the business.

There are a number of qualitative forecasting methods:

Panel approach: this can be a panel of experts or employees from across a

business such as sales and marketing executives who get together and act like a

focus group, reviewing data and making recommendations. Although the outcome

is likely to be more balanced than one person’s opinion, even experts can get it

wrong!

Delphi approach: this involves crafting a questionnaire and sending it out to

relevant experts (like customers and suppliers) who complete it. The results are

analyzed and returned, anonymously, to the participants, who get to reconsider

their original responses in light of other views and opinions, until a final consensus

is found. This more formal approach helps reduce influences from face-to-face

meetings but could still include inherent bias from the experts chosen.

Scenario planning: this can be used to deal with situations with greater

uncertainty or longer-range forecasts. A panel of experts is asked to devise a range

of future scenarios, likely outcomes and plans to ensure the most desirable one is

achieved.

2.write the limitations of the different types of quantitative and qualitative

methods inventory forecasting

In moving average forecasting it gives equal weight to each period and it mainly
focuses on the data chosen by a single chosen period.

In exponential smoothing the main limitation is that nothing can be fully

forecasted and if fluctuations do occur over a couple of periods which can happen
due to many reasons we might face inventory stock outs and deficit one a
continual bases.
During the panel approach we can not fully guarantee the forecasts of experts
because even they make mistakes and are still not fully reliable.

In Delphi approach There are a lack of clear methodological guidelines. Continued

commitment is required from participants who are being asked a similar question
multiple times. There is no evidence of reliability.

3. write your critique in using the qualitative and quantitative forecasting

methods.

The major con of qualitative forecasting is that it can be largely opinionated and
as a result be subjective this blocks us from finding the actual forecast whether it
still be right or wrong . Quantitative forecasting methods rely on historical data to
predict the future by finding trends and relationships in the historical data and
this data can easily not live up to its forecasts because new and unexpected
events continuously appear and over all if there is one thing we can be sure about
both methods of forecasting is that we cant fully anticipate what’s coming and
there are always going to be new results that take us by surprise.

4. From qualitative and quantitative methods of forecasts which methods is the

best and why?

The best forecasting method truly depends on our situation and the type of
circumstances we are dealing with because as mentioned in the previous answer
there is no method that can fully tell us what to anticipate and the best way is to
use both qualitative and quantitative demand forecasting techniques for a more
well-rounded perspective.

5. write the importance of material budget in inventory management.

A materials budget is an important budgeting tool for businesses that make their
own inventory because it will help us determine how much material is required
to satisfy the production budget and helps us avoid inventory obsolescence and
wasted capital from useless goods since Many inventory types in the business
environment have a specific shelf life.