Types of Forecasting Research Paper Example | Topics and Well Written Essays - 1000 words

Types of Forecasting - Research Paper Example There is no one standard method of forecasting, the effectiveness of the method depends upon the nature of the business and its usefulness to it. (Render, Stair & Hanna. 2003) Forecasting is easier to perform in businesses which have historical data to follow. For a new business like the one John and Micheal are pursuing is a new business line for which no substantial historical data is available. Further the business with this new venture needs expansion in the scale of production along with the changes in the supply chain. Due to all these factors the forecasting needs to be done in a way which incorporates the changes in the business, its supply chain while reducing cost and increasing profits in the business. The quantitative methods would not be suitable to apply as no historical data on the same lines of business will be available because of the newness of the product in the markets and lack of competitors of the product. The approach Stone Horse Supply Company needs to follow will be forecasting in view of the supply chain which can meet customer’s requirement on time, save costs associated with inventories and earn profits in the future. Unlike the traditional supply chains in the past, the supply chains now focuses on the demand chains, that is greater focus is given on the customers and their needs. Demand forecasting can be done at Stone Horse Supply Company by determining the demand for the future and what level of sales could be achieved. There are many methods of forecasting through which sales and demand can be determined which all usually work on the historic data and underlying assumptions which can not be applied to the new venture Stone Horse Supply Company is going to undertake. (Lawrence, Geurts, & Guerard. 2002) a. Consumer Surveys/ Market Research: This approach is a systematic approach to gain an