Introduction to Forecasts and Trends

Question 1

Identify and describe three classes of qualitative business forecasting methods.

Answer 1

1. Executive opinion: The collective judgment and opinion of executives and managers are used to develop a forecast.
2. Market research: Surveys of customers and others are done to determine preferences and other factors as a basis for formulating a forecast.
3. Delphi method: Uses a consensus developed by a group of experts using a multi-stage process for converging on a forecast.

Question 2

Identify and describe the two major classes of quantitative business forecasting methods.

Answer 2

1. Time-series models: Use patterns from past data to predict a future value or values. These methods are not concerned with causes of patterns, just the patterns in the data.
2. Causal models: Use assumed relationships between the variable being forecasted and other variables to make projections based on those relationships.

Question 3

Identify and describe the two major classes of business forecasting methods.

Answer 3

1. Qualitative: methods that are subjective in nature and based on judgment and opinion
2. Quantitative: methods that are objective in nature and based on mathematical calculations and determination.