Quarterly forecasting updating revenue and expense models

Forecasts that simply sketch what the future will be like if a company makes no significant changes in tactics and strategy are usually not good enough for planning purposes.On the other hand, if management wants a forecast of the effect that a certain marketing strategy under debate will have on sales growth, then the technique must be sophisticated enough to take explicit account of the special actions and events the strategy entails.The manager as well as the forecaster has a role to play in technique selection; and the better they understand the range of forecasting possibilities, the more likely it is that a company’s forecasting efforts will bear fruit.The selection of a method depends on many factors—the context of the forecast, the relevance and availability of historical data, the degree of accuracy desirable, the time period to be forecast, the cost/ benefit (or ) of the forecast to the company, and the time available for making the analysis.From a strategic point of view, they should discuss whether the decision to be made on the basis of the forecast can be changed later, if they find the forecast was inaccurate.If it This clarifies the relationships of interacting variables.Techniques vary in their costs, as well as in scope and accuracy.The manager must fix the level of inaccuracy he or she can tolerate—in other words, decide how his or her decision will vary, depending on the range of accuracy of the forecast.

Exhibit II displays these elements for the system through which CGW’s major component for color TV sets—the bulb—flows to the consumer.To handle the increasing variety and complexity of managerial forecasting problems, many forecasting techniques have been developed in recent years.Each has its special use, and care must be taken to select the correct technique for a particular application.These factors must be weighed constantly, and on a variety of levels.In general, for example, the forecaster should choose a technique that makes the best use of available data.

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