Estimate of demand for each individual product or service

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Question: It has been said that forecasting is like driving a car by looking in the rear-view mirror. In operations management, we forecast a wide range of future events, which could significantly affect the long-term success of the firm. You touched on the idea that most often the basic need for forecasting arises in estimating customer demand for a firm's products and services. However, we may need aggregate estimates of demand as well as estimates for individual products. In most cases, a firm will need a long-term estimate of overall demand as well as a shorter-run estimate of demand for each individual product or service. What do you think we would need both short-term and long-term forecasts for? What can each be used for?

In addition, I want to point out the difference between forecasting and planning. Planning is often in response to a forecast. A passive response would be to reduce output because of a predicted decrease in demand, while an active response would be to advertise in an effort to offset the predicted decrease in demand.

Reference no: EM133299551

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