Question

If you were the Director of logistics, describe the basic characteristics of forecasts that your managers should be aware of.

Answer 1

As a director of logistics the important variable that will be in question will be the demand for products. Due to this, the managers should be aware of certain characteristics of the forecasting techniques, methods and results. These are

• Forecasts are nearly always wrong: irrespective of which forecasting method we choose, it is nearly impossible to get the numbers exactly correct. The key to remember is that the method with the least deviation or error should be preferred
• Errors are everything: in forecasting method, we choose the method that provides the least amount of errors.
• Methods: there are different forecasting methods. However, purely quantitative or purely qualitative methods are never sufficient. We need to mix them in order to improve our forecasting system. This is because sometime the quantitative methods alone cannot predict several external possible factors. Same way, without quantitative methods, forecasting is a glorified guesswork
• Internal and external factors: while forecasting we must look at internal and external factors in order to improve our forecasts. We need to look at data patterns, impact of seasons, external events and other factors to improve