MOB Forecasting

Question 1

What is forecasting?

Answer 1

Forecasting is the use of past and present data to make predictions

Question 2

What are the two categories in forecasting?

Answer 2

Quantitative and qualitative

Question 3

What is Quantitative forecasting?

Answer 3

Quantitative forecasting refers to the utilization of historical data and mathematical models to make predictions.

Question 4

What is Qualitative forecasting?

Answer 4

Qualitative forecasting relies on subjective assessments, opinions, and expert judgment to make predictions.

Question 5

What is time series analysis?

Answer 5

Time series analysis refers to the sequence of data points that occur in a successive order over a period of time and uses information regarding historical values and associated patterns to make predictions.

Question 6

What are the components of the time series analysis?

Answer 6

Trend, seasonality, cyclicality, and irregularity.

Question 7

What does the “Trend” component of time series analysis refer to?

Answer 7

The trend component states that there are no fixed intervals, and any divergence in the dataset is a continuous time line. The trend can either be a null, negative, or positive time line.

Question 8

What does the “Seasonality” component of time series analysis refer to?

Answer 8

The seasonality component states that the normal or fixed interval shifts within the dataset in a continuous line. The line is a bull curve or saw tooth.

Question 9

What does the “Cyclical” component of the time series analysis refer to?

Answer 9

The cyclical component states that there is no fixed interval but uncertainty in the movement and pattern.

Question 10

What does the “Irregularity” component of the time series analysis refer to?

Answer 10

The irregularity component states unexpected situations, events, or scenarios that spike in a short period of time.

Question 11

Why is time series analysis useful?

Answer 11

The time series analysis is useful as it shows how a given asset, security, or economic value changes over time. It can also be used with comparisons of chosen data to shifts in other variables over the same period of time.

Question 12

What are the benefits of time series analysis?

Answer 12

1. Analyzing historical datasets and its patterns.
2. Understanding and matching the current situation with patterns derived from the previous stage.
3. Understanding the factors or factors influencing variables in different periods.

Question 13

What are the limitations of time series analysis?

Answer 13

1. The data points must be linear in their relationship.
2. Data transformations are mandatory, so it’s a little expensive.
3. The missing values are not supported by the time series analysis.

Question 14

What is the Sales-force composite method of forecasting?

Answer 14

The sales force composite method refers to where sales agents forecast sales in their respective territories, which is then integrated with branch/region/area level. The aggregate of all these factors are then consolidated to develop the company’s sales forecast. It is referred to as the bottom-up approach.

Question 15

Why is the sales force composite method useful?

Answer 15

The sales force composite method is useful as the sales force is the closest to the customers and can give a more accurate prediction on the basis of their direct experience with customers.

Question 16

What are the benefits of the sales force composite?

Answer 16

1. The intimate and experienced knowledge of the sales agents in their respective territories can be used effectively.
2. The sales agents are responsible for the forecasts therefore, accountability can be taken.
3. Motivates sales agents as sale agents forecast the sales themselves, they’ll put more effort into making the forecast.

Question 17

What are the limitations of sales force composite?

Answer 17

1. Sales agents are not experts in forecasting and, therefore, cannot employ sophisticated forecasting techniques.
2. Agents are heavily influenced by existing conditions in their territories, due to which he can become pessimistic or optimistic about future sales.
3. Agents may be corrupt and intentionally give fewer sales forecasts so they can receive more incentives or bonus from management on exceeding sale targets.

Question 18

What is the Jury Method of forecasting?

Answer 18

The jury method refers to when executives from various departments come together and forecast sales based on their experience and specialization. It is based on the executives of the HR, Marketing, Finance, and Production departments opinions.

Question 19

What are the two ways to conduct The Jury Method?

Answer 19

Two ways to conduct the jury method are Top Jury Method and the Percolated Method.

Question 19

What is the Top Jury Method of the jury method of forecasting?

Answer 19

The Top Jury method refers to the consultation of only top executives with the highest level of expertise to discuss complex problems and come to a consensus.

Question 20

What is the Percolated Method of the jury method of forecasting?

Answer 20

The Percolated Method refers to collaboration of top executives, several marketing, production, finance and other departments, who are all experts in their fields, discuss their opinions to arrive to a final forecast. This is done to get the opinions of the different people at different levels in the organization.

Question 21

What are the benefits of the Jury Method of forecating?

Answer 21

1. It can be reliable once the top executives are well informed about the overall economic environment and the existing conditions in their industries.

Question 22

What are the limitations of the Jury Method of forecasting?

Answer 22

1. Based on opinions, not facts
2. The responsibility to forecast is distributed therefore, no one person can be held accountable
3. This forecast is general and cannot be readily broken into month-wise, product-wise, department-wise data. Hence, another department will have to make that forecast.

Question 23

What is the Delphi Method of forecasting?

Answer 23

The Delphi Method refers to the structured process of collecting knowledge from a group of experts by means of a series of questionnaires.

Question 24

What is the Consumer Survey Method of forecasting?

Answer 24

The Consumer Survey refers to one of the demand techniques involving a direct interview with potential consumers.

Question 25

What are the Three methods of the Consumer Survey Method?

Answer 25

The three methods are the Complete Enumeration Method, Sample Survey and End-use Method

Question 26

What are the benefits of the Consumer Survey Method?

Answer 26

1. Less costly
2. Less time consuming

Question 27

What is the Consumer Survey useful?

Answer 27

It is used to estimate the short-run demand of firms, households and government agencies who plan their future purchases