√ Definition of Forecasting, Objectives, Functions, Benefits, Methods & Types
Definition of Forecasting, Objectives, Functions, Benefits, Methods & Types – In this discussion we will explain about forecasting. Which includes the meaning of forecasting, forecasting objectives, forecasting functions, forecasting benefits, forecasting methods and types of forecasting with complete and easy-to-understand discussion. For more details, please see the review below carefully.
Definition of Forecasting, Objectives, Functions, Benefits, Methods & Types
Let's discuss the meaning of Forecasting or Forecasting first.
Definition of Forecasting
Forecasting or forecasting is the activity of predicting or estimating what will happen in the future with a relatively long time. Another understanding of forecasting is a calculation analysis technique that is carried out by approximation qualitative or quantitative to predict future events using reference data on past.
Forecasting has the objective of predicting economic prospects and business activities as well as environmental influences on these prospects. Forecasting is the most important part for every company or business organization when making management decisions.
Forecasting itself can be the basis for a medium-term or long-term plan of a company. In a forecasting (forecasting) required minimum error (error) in it. In order to minimize the error rate, it would be better if the forecast was carried out in numerical or quantitative units.
Forecasting Objectives
According to Heizers and Renders (2009:47), forecasting has the following objectives:
- As a reviewer of company policies that apply now and in the past and also see the extent of influence in the future.
- Forecasting is needed because there is a time lag or delay between when a company policy is set and when it is implemented
- Forecasting is the basis for business depreciation in a company so that it can increase the effectiveness of a business plan.
Forecasting Function
The function of forecasting will be known when making decisions. A good decision is a decision based on consideration of what will happen when the decision is executed. If the predictions that have been prepared are inaccurate, then forecasting problems are also problems that are often encountered (Gingting, 2007).
Benefits of Forecasting
The uses or benefits of forecasting are as follows:
- As a tool for planning an effective and efficient
- To determine future resource requirements
- To make the right decision
Forecasting Method
Forecasting method is a way of estimating or predicting quantitatively or qualitatively what will happen in the future based on relevant data in the past. The use of this forecasting method is to predict systematically and pragmatically on the basis of relevant data in the past. Thus the forecasting method can provide greater objectivity.
The types of forecasting methods, among others, as follows:
- Forecasting method based on the use of linkage analysis between variables estimated by time variables with time series (time series).
- Forecasting method based on the use of pattern analysis of the relationship between the variables to be estimated with other variables that become influences, which are not time, is called the Correlation Method or cause and effect (method causal).
Types of Forecasting
According to Herianto (2008:78) based on the time horizon, forecasting can be divided into three types, namely:
- Long Term Forecasting
Is that covering a longer time than 18 months, such as forecasting required in relation to investment, planning facilities and planning for R&D activities. - Medium Term Forecasting
Is covering a time between 3 to 18 months, such as for example forecasting to plan sales, plan production and plan temporary workforce - Short Term Planning
Is covering a period of less than three months. For example forecasting in relation to planning material purchases, making work schedules and assigning employees.
According to Heizers and Renders (2009:47) based on the function and planning of future operations, forecasting is divided into three types namely:
- Economic Forecast
This forecast discusses the business cycle with predictions of inflation rates, availability of money, funds needed for housing construction and other planning indicators. - Technological Forecast
This forecasting understands the level of technological advancement that could launch an exciting new product that requires new plant and equipment - Demand forecasting (Demand Forecast)
Is the projected demand for a company's products or services. Projection of demand for a company's products or services, this forecast can also be called sales forecasting controlling production, capacity as well as scheduling systems and being the input for planning finance, marketing and sourcing man.
According to Saputro and Asri (2000: 148) based on the type of forecast data compiled, this type of forecasting is divided into two, namely:
- Qualitative Forecasting
Is a forecast based on the qualitative past. The results of the predictions that are made are very dependent on the people who make them. This is important because the forecast is determined according to intuitive thoughts, opinions and knowledge and experience of the compilers. Often this qualitative forecast is based on the results of investigations such as salesman opinions, sales manager opinions, expert opinions and consumer surveys. - Quantitative Forecasting
Is a forecast based on past sales data. The forecasting results that are made depend on the method used in the forecasting. Using different methods will produce different results.
Menur Ginting (2007) based on the nature of the constituents, forecasting is divided into two types, namely:
- Subjective Forecasting
Is a forecast based on the feelings of the intuition of the person who composed it. - Objective Forecasting
Is forecasting based on relevant data in the past by using techniques and methods in analyzing the data.
Thus has been explained about Definition of Forecasting, Objectives, Functions, Benefits, Methods & Types I hope this adds to your insight and knowledge. Thank you for visiting and don't forget to read other articles.
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