Forecasting Successful organizations are also those who are able to make relativ
ID: 392963 • Letter: F
Question
Forecasting
Successful organizations are also those who are able to make relatively accurate forecasts about the future needs (inventory, facilities, capacity, manufacturing, manpower) for the products produced or the services delivered.
Forecasting is an uncertain science since it calls for predictions but current theoretical and mathematical models (quantitative and qualitative) make it possible for organizations to predict with an acceptable margin of error. Think about it this way: Without forecasting, organizations would always be responding rather than acting.
1. Select one industry from the list below: Bank, restaurant, health clinic/hospital, airline, or university.
2. What specific variables would be needed by that organization in order to forecast? Be sure you explain why you selected each variable and why it is important to forecasting.
3. Which variables are used for short-range forecasting, long-range forecasting, or for both? Make sure you support your selections.
DO NOT COPY FROM COURSE HERO. USE OWN WORDS
ANYBODY WATCHING, DO NOT COPY THIS TO DISCUSSIONS AS I WILL SEE THIS!!!
PLEASE USE REFERENCES OR PLACE A LINK THAT I CAN LOOK ATT
DO NOT HAND WRITE IT AS I CAN NOT READ THAT. TYPE IT OUT ON HERE THANK YOU
Explanation / Answer
Industry selected: Bank
Variable needed by the organization to forecast:
Gross Domestic Product:
This is a macro-economic parameter which broadly determines the employment rates, the disposable income with people, the prices of real estates, the manufacturing of equipment and vehicles etc. on which the people of the country can have decision of spending the money available. This helps in short and long range forecasting for banks because the GDP increase or decrease does not change overnight.
Disposable income:
This is known as the amount that people are left with after deduction of taxes and social security charges and are able to spend. This is an important factor because the projections of private consumption and saving rates typically take into account real disposable income. This helps the banks to determine rates for savings accounts. Not only the savings account rates but also the issue of credit cards and the customer base for the same.
This factor helps in the short range forecasting and not in the long range forecasting due to the increase in the marginal error of forecasting.
Rate of inflation:
The rate of inflation has impact on various commodities and services and ultimately determines the prices. This impacts the loan rates and helps the banks decide the rate of loan and credit. This helps in both short range and long range forecasting since the rate of inflation is not an overnight phenomenon.
Regulations and policies:
Various regulations such as change of tax rates, structure of taxes, for example, introduction of Value added taxes, GST etc. changes the rates of articles and services. This in turn has an impact on the loans offered, current accounts and customer base. This helps in both long range and short range forecasting since the policies and regulatory changes stay in the systems for years.
Employment rates:
The employment rates tell the disposable amount people will have, the salary accounts their employers will be opening. The banks can have lucrative offers for their customers on salary accounts and the credit cards. This again helps only in short range, since, once inflation pops in, the employment rates many go down.
Foreign trades:
The increase in the business ties of a country with other country has an impact on the exports and imports of articles. This helps banks in short range forecasting.
Start-ups:
The increase in the numbers of entrepreneurial stint of people and the number of start-ups helps banks determine the rates of loans and also, the other services such as offerings on lockers etc.
Foreign investments:
The foreign investments in the business of the country helps increase the number of businesses and in turn the rate of employment. This helps banks in the short and long term forecasting.
Real estate market:
The housing loans determines on the real market situations which keep on changing. The sale and buying of properties highly depend on this factor. This helps banks in short range forecasting.
Projections for residential construction takes into account demographic trends, housing stocks, real income and financial conditions as well.