Illustrate about forecasting in management, Managerial Economics

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Illustrate about forecasting in management

A forecast expert has been asked to provide quarterly estimates of the sales volume for a specific product for the next four quarters. How should he attempt at preparing the quarterly sales volume forecasts? Reviewing actual sales data for the product in question for past periods would give a good start. Supposing that forecaster has access to actual sales data for every quarter during the 25-year period firm has been in business. Using this historical data, forecaster can identify the general trend of sales. He or she can also determine whether there is a trend or pattern, like an increase or decrease in sales volume over time. An in-depth review of the data may unearth some type of seasonal pattern, like peak sales occurring around the holiday season. So by reviewing historical data, there is a high probability that forecaster develops a good understanding of pattern of sales in the past periods. Understanding these patterns can result in better forecasts of future sales of the product. Additionally if the forecaster is able to recognize the factors which influence sales, historical data on these factors (variables) can also be used to produce forecasts of future sales.


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