Learning Objectives Chapter 4

7.) Describe major types of forecasting.

Forecasts are divided in two categories: qualitative and quantitative.

Qualitative forecasting techniques are based on judgment/opinion. Some approaches are:

• Jury of executive opinion- A group of executives called upon to provide insights from various areas of the organization.
• Sales force composite- Survey of salespeople as their future buying intentions.
• Survey of buyer intentions- Survey customers as to their future buying intentions.
• Delphi technique- A method that surveys experts, averages the results, and repeats the survey.

Quantitative forecasting techniques- Based on statistical analysis of historical data. Examples of quantitative approaches are:

• Time-series analysis- The use of past data to predict future outcomes.
• Trend analysis- Procedure in which an analyst looks for a pattern in data, then uses it to project future demand.
• Exponential smoothing- Time-series analysis that gives more weight to recent data and less to older data.
• Market test- The offering of a product in a few test markets.