Tuesday, August 21, 2018

Purpose of short term forecasts

Forecasting should be an integral part of the decision-making activities of management, as it can play an important role in many areas of a company. Short-term forecasts are needed for scheduling of personnel, production and transportation. As part of the scheduling process, forecasts of demand are often also required.

Short-term forecasts are usually made for tactical reasons that include production planning and control, short-term cash requirements and adjustments that need to be made for seasonal sales fluctuations. This latter factor can be very important for production, whereas the general trend may be of less consequence.

Due to scenario of economic stability, the companies has been worried about investing in planning their operations, making use, mainly, of forecasting methods in order to become more competitive in the market. In the case of food industry, the seasonal and the short perishability factors are a limitation to the maintenance of stocks, requiring a forecast with a high accuracy level.

Short-term forecasting is intended only a few time periods, days, weeks or months into the future and is divided more precisely based on real demand of a certain product. If company is selling products from a stock, the short term sales forecast comprises the stock fulfillment in order to maintain availability.
Purpose of short term forecasts
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