Operations Management Essay

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Operations Management Most may think that forecasting only applies to predicting the weather. In chapter 3 of Operations management, it discusses the importance of forecasting in the business world. Humans use forecasting on a regular basis. Firms use forecasting so that they can plan for the future and many of the variables that come with it. Managers will use forecasting as a tool to plan in accounting, finance, human resources, marketing, and management of information systems. (p. 68) Common Forecasting Features Managers must have an understanding of forecasts so that they can plan ahead. Forecasts are unfortunately not perfect. Rarely does a forecast happen exactly as predicted. Managers should give a cushion for forecasts that weren’t accurately predicted. They should also forecast in large groups. It is easier to predict the overall outcome than to predict on a smaller scale. They should also realize that forecasting over a large period of time will decrease the effectiveness. (p. 69) Effectiveness While conducting a forecast, managers should allow for time to change or adapt to the prediction. Managers will have to forecast as accurately as possible and state the accuracy of it. They will have to be able to compare the accuracy of this forecast from another. A forecast needs to be in writing. This way the entire firm can have a copy and be able to adjust the same way if needed. It should also be cost-effective. You cannot make adjustments if it is not feasible for the company. (p. 69-70) Forecasting process There are six generic steps to the forecasting process. The first step in the process is to state the purpose of the forecast. Questions should be answered on how and when it will be needed. There must be a time line for the forecast. A technique should also be established. Obtain the proper data to conduct the forecast. Make a projection

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