Forecasting for Decision Making

Forecasting for Decision Making

When it comes to business, forecasting is the number one tool for keeping the business afloat. Over the years forecasting has based more on a scientific analysis because of the theories, methods, and techniques that is used to forecast specific data. When information technology and the Internet was development it helped companies improve their forecasting schemes. The technology supplied companies with the software and electronic networks that contain the mathematical and data information that was needed for forecasting. Through the internet businesses were elevated by three interrelated phenomena: the internet provide the necessary tools to aid the science of business, secondly the internet was able to construct models and make predictions and lastly the internet brought change to businesses which made the task of forecasting to be more exact. ("Business forecasting," 2012)

The tools that will be needed for forecasting is electronic spreadsheets, enterprise resource planning (ERP), and electronic data interchange (EDI), advanced supply chain management systems, and many other web based technologies. All of these tools are available to companies but using the right one will take some investigation. Companies can element the guess work by using the three models for forecasting which are: time-series, which is simply data that is projected forward based on an established method. The established methods are: simple average, exponential smoothing, decomposition, and Box-Jenkins. The second model is cause and effect, which is where one assumes a cause that will determines what happens next. The last model is the judgmental model which is where someone attempts to make a forecast but there is no data. ("Business forecasting," 2012)

Forecasting can be a strong reliable if companies know how and when to integrate the different tools of forecasting. By using the internet companies will be able to project the flow of components into the future which will aide them into reach higher levels instead of waiting for something to happen. ("Business forecasting," 2012)