Operations Management: An Integrated Approach, 5th Edition

FORECASTING ACROSS THE ORGANIZATION

Forecasting is an excellent example of an activity that is critical to the management of all functional areas within a company. In business organizations, forecasts are made in virtually every function and at every organizational level. Budgets are set, resources allocated, and schedules made based on forecasts. Without a forecast of the future, a company would not be able to make any plans, including day-to-day and long-range plans. In this section we look at how forecasting affects some of the other functions of an organization.

Marketing relies heavily on forecasting tools to generate forecasts of demand and future sales. However, the marketing department also needs to forecast sizes of markets, new competition, future trends, and changes in consumer preferences. Most of the forecasting methods discussed in this chapter are used by marketing. Marketing often works in conjunction with operations to assess future demands.

Finance uses the tools of forecasting to predict stock prices, financial performance, capital investment needs, and investment portfolio returns. The accuracy of demand forecasts, in turn, affects the ability of finance to plan ...