Qualitative techniques in forecasting Forecasting is a management and organizational related term which describes the planning in advance for events that would most likely occur in future. Based on the facts and information at hand, it helps predicting the events. It provides information about the stock available, performance comparisons, the investments that can be made in future, inventory control, supply chain considerations and other issues that directly impact the performance (Rescher, 1998). Forecasting is broadly split into two categories, namely qualitative forecasting and quantitative forecasting. Each of them is used in their own required conditions.
Qualitative forecasting is performed in situations where the future trends are slightly unclear and nothing can be derived conclusively. The decision taken in such type of forecasting is relied mostly on the previous experience and situation at hand. Qualitative forecasting are most commonly used in situation when a new product or process is being launched. Where there is no such history of the product or process conducted that can give a clear and exact details of future event. Methods involved in qualitative forecasting include the following: Jury of executive opinion: This is one of the methods undertaken for forecasting which mostly includes the top management and decision makers who analyze the situation and proceed further.
All top level officials contribute with their knowledge and propose solutions and ideas. The decisions so taken are balanced by various studies, feasibilities reports, stakeholders’ opinions, and statistical analysis. Based on all the possibilities and conditions, decisions are taken accordingly Delphi Method: Delphi method is predominantly based on the findings from consensus. The activities performed in this method pertain to long range forecasting schemes and takes into consideration all those elements that will have an impact on the future proceedings of the organization.
Such forecasting methods mostly pertain to the opinion and survey for the new technology and product that might be initiated in longer run (Wilson, 2009). Customers’ survey: In this kind of forecasting, the decisions and planning is done keeping in consideration the opinion and say of the customers. Since customers opinion and response directly impacts the organization, therefore this kind of forecasting is of vital importance and anything concluded from this should be based on facts and highly accurate which represents the true voice of customers.
Surveys can help determining the people’s interest and trends they would follow in coming days. Based on their opinion, the strategies may be devised for processes and products manufacturing. Life Cycle Analogy: Such forecasting technique strictly implies to the products or ideas that are newly introduced. Analyses are derived based on the previously introduced similar products. Forecasts from the previous cases are studied and then compared accordingly. This involves the study of life cycles and its relation to the product performance in each of them.
These stages mainly include the initiation, growth, maturity and finally the decline stage. The advantage of life cycle analogy forecasting is its relatively high percentage of accuracy and ease of forecasting (Bozarth & Handfield, 2006). All these techniques help determining the future values and situations which in return results in increased productivity of the organization. Bibliography: 1-Bozarth, C. C., & Handfield, R. B. (2006). Introduction To Operations And Supply Chain Management. New Jersey: Pearson Education. 2-Rescher, N. (1998). Predicting the Future: An Introduction to the Theory of Forecasting.
SUNY Press. 3-Wilson, J. H. (2009). BUSINESS FORECASTING WITH FORECASTX. Boston: Mcgraw-hill Companie.