Bartol and Martin (1998) give the meaning of forecasting: .
"The process of making prediction about changing conditions and future events that may significantly affect the business of an organization." (p.170).
The same authors (Bartol and Martin,1998) also point out that business activities like planning and decision making depend heavily in forecasting as they need good interpretation of future events(p.170).
Types of forecasting.
Forecasting various methods are divided in two major categories, the subjective and the objective, which both are presented in Exhibit 1.
Choosing Between Forecasting Methods.
Churchill et al (2000) point out that despite the many advantages and disadvantages (presented in Excibit1.1) that exist in any forecasting method and approach the final decision depends on the forecasting nature or in the method that have been used by other companies (p,135). .
Exhibit 1 Classification of Forecasting Methods.
.
Forecasting methods .
.
.
.
.
Subjective methods:Users' expectationsSales force compositeJury of executive opinion Delphi technique Objective methods:Market testTime series analysis Moving averages Exponential smoothing DecompositionStatistical demand analysis .
.
.
.
Churchill et al,2000 (p,136).
.
Exhibit 1.1 Summary of Advantages and Disadvantages of Various Forecasting Techniques.
Forecasting .
Method Advantages Disadvantages.
User expectations 1. Forecast estimates obtained directly 1. Potential customers must be few and.
from buyers well defined.
2. Projected product usage information 2. Does not work well for consumer goods.
can be greatly detailed 3. Depends on the accuracy of user's.
3. Insights gathered aid in the planning of estimates.
marketing strategy 4. Expensive, time-consuming, labor.
4. Useful for new-product forecasting intensive.
