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Forecasting for Operations   

Forecasting means estimation of type, quantity and quality of future work e.g., sakes etc. The survival of a manufacturing enterprise depends on its ability to assess, with reasonable accuracy, the market trends several years ached. Forecasts will be able to make use of sales trends, but these must be considered in the light of expected introduction of new materials, fashion changes, policies of competitors, unreasonable weather, thereat of war and the general economic situation expected in the country and foreign markets. Forecast represents a commitment on the part of the sales department and each of its division of expected sales. It becomes a goal against which the effectiveness of the sales department will be measured. It plays a crucial role in the development of plans for the future. Sales Budged (estimate) forms the basis for manufacturing budget. It is the sales forecast which enables to determine production quantities, lour, and equipment and raw material requirements.

Sales Forecasting is essential because,

(i)    It determine the volume of production and the production rate
(ii)    It forms the basis for production budget, labor budget, material budget, etc.
(iii)    It suggests the the need for plant expansion
(iv)    It emphasis is the need for product research development.
(v)    It suggests the need for changes in production methods.
(vi)    It helps establishing pricing policies
(vii)    It helps deciding the extent of advertising, product distribution, etc.

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