Question

1. in about 50 words comment three distinct aspects of the art/science of forecasting.

2. Describe briefly 3 distinct business scenarios for which quantitative forecasting techniques would probe useful.

4. describe 3 diatinct business decision making scenarios for which linear programming can be used effectively. for each one explain why it is a good application od linear programming.

5. discuss 2 distinct strong points ans two distincts weak points of linear programming (not the excel software) as an analysis tool to support managerial decision making.

Answer 1

1. Art is subjective in nature. Forecasting as an art helps to distinguish between good and bad. the data is qualitative and random. Forecasting as an art helps to identify which information is useful. Science is objective in nature. Forecasting as a science is measurable, quantitative and provides cause and effect relationship.
2. Qualitative methods (judgment of experts) of forecasting are:

- Delphi Method- A group of experts’ opinions are sought through questionnaires using the Delphi method. The experts in the group forecasting are from various business functions such as marketing, production, finance, etc. A consensus is reached for the selected opinion after rounds of review. This method is used in developing strategies for sales and production in companies.

- Market research for determining the demographics factors and the consumer buying habits are used by consumer product manufacturers to determine the demand of the products.

- Jury’s opinion- the executives or the management’s opinion is sought. The opinion of high level managers is sought in this forecasting method however the supporting statistical data are used to help the executives to give their opinions. For example, company’s financial statistics are given to the top management and advisory board members to forecast the capital investment and their opinions on the source of funds.

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