A corporate or department manager and a designated forecaster typically work together to forecast. They should collaborate and make an effort to respond to the following queries before making forecasts.
What is the forecast’s objective?
This establishes the necessary level of precision and aids in choosing the most suitable forecasting methods. A broad choice, such as deciding whether or not to enter a new market, can be done by roughly forecasting the future size of that market. On the other hand, a more complex choice calls for a thorough and exact method, such as choosing the appropriate budget for every department.
What constitutes the forecasting system’s principal elements and variables?
Before producing a forecast, the distinct parts of the system that has to be forecasted need to be assessed and their relative values analysed. Based on the needed forecast, this can mean an in-depth investigation of any relevant parts of the sales system, distribution system, marketing process, production system and other elements being analysed.
How much do past occurrences affect predictions for the future?
Significant shifts from when the data was collected in the past can make the projection less accurate. Data obtained in the past could become out-of-date and useless with the introduction of new products, strategies, sales channels, and industry advances.
