 Friends, today we will be discussing about cells forecasting, the learning out of the session will be students will be able to explain the concepts of forecasting, the overall brief contents of the today's session will be introduction, definition and concept, need of the forecasting, applications of forecasting, elements of forecasting, steps in the forecasting. Introduction, as all of us know that every firm, every organization may be a manufacturing or may be a service organization is very keenly interested to know what is the expected demand for its product in the future, what is the share of business during the specified period, this knowledge is required by the firm for its survival and growth, decisions to related to the product mix, what is the meaning of all these statements, the meaning of the statements is that all organizations are striving to get as accurately as possible the demand which is predictable in the near and long term future. Forecasting is not a new world for all of us, we generally see forecasting results of elections, forecasting of your marks, forecasting of the weather, forecasting of the economy, forecasting of the monsoon, forecasting related to the temperatures, forecasting related to the various processes. There are n number of areas where we generally knowingly or unknowingly are definitely acquainted with the word of forecasting. We also discuss about the accuracy of forecasting, the meaning and the error of the forecasting and so on. Today we will be discussing more about the operations related to the forecasting issues mainly manufacturing and service sector. The future depends upon the forecasting accuracy, so therefore what will be the expected demand in the near or long term future, the answer is generally lying in the word of forecasting and it is the starting point for all the decisions related to the production or operation strategy in the near future. The definition of the forecasting is it is an estimate of cell in physical units or in the monetary value for a specified future period under proposed marketing plan or program under the assumed set of economic and other forced outside other forced conditions outside the organization. The forecasting is based on the past or historical data and requires some statistical technique. What is the meaning of this definition? It is the trying to estimation of the cells for the future may be in terms of monetary value or may be in terms of specific number of units and what is the meaning of specified future period? It may be a one month, three months, generally up to one year we generally call it as short term forecasting and beyond one year to three year generally taken as a medium term and after three years we generally take as a long term forecasting. So it depends upon which particular forecasting we are interested in as the forecast accuracy is closely related to the future data and there are one more another condition is that the assumed set of economic and other conditions are there generally these may not actually behave as we expected to behave or as at the time of forecasting we have considered some economic and some other outside conditions those may change which can directly affect the accuracy of the forecasting. Forecasting is generally based on the past or historical data if the particular product or service has the past historical data it is very difficult if the data is not available. There is another term closely associated with the forecasting which is generally called as prediction. What is the prediction? It is an estimate of the future on the basis of subjective considerations other than just past data. For prediction could manager skill, experience, judgment and expertise necessary. People are confused about prediction and forecasting. Forecasting is a scientific technique based on some statistical technique or based on some time series and so on but whereas prediction is based on the experience, judgment and skill of the particular management people or particular experts those are in the involved in the particular process. What is the need of the forecasting? The forecasting is useful it helps to determine the production capacity that is actually required. The product mix decision product mix decision the meaning of product mix is that we have got variety of products and in the future which products are to be added which new varieties to be added which varieties to be withdrawn for which particular variety the enhancement of capacity is to be done and for which we have to minimize the capacity depending upon the competition and the economic conditions and the product life cycle management of the particular product where to take product mix decisions. Generally forecast helps to take the proper product mixing decisions to decide whether a new product is to be added in the product line or to drop an unnecessary once. It generally happens that we go on adding the product because of the demand from the market. The market always needs more variety at the same time there will be some products which will have a diminishing margin or diminishing value as a result of that management has to take a decision to withdraw some of the products of the existing line and to add new product lines in both the cases forecasting is very much essential. We need to have manpower planning manpower may be at various levels once we decide the product forecasting based on that how much manpower will be well required at which level it is required all that can be estimated and the most important part from the management side is cash flow management we have to see what is the cash flow required for the particular new demand which are trying to be estimated. Now what are the various applications of the forecasting you can think on this. Please think variety of areas where you are exposed to or you may not be exposed to don't think from the only production or service applications what all are the various applications in the forecasting have you thought of it fine let us discuss the answer applications of forecasting in accounting we need the forecasting for cost and profit estimates for finance cash flow and funding a very crucial issue in the companies human human resources required the manpower for the hiring or recruitment all training purpose at various levels marketing pricing promotion strategy these are the basic decisions in the marketing for which forecasting is a base management system where IT systems and what support from IT system is required what are the additional services which are required all depends upon the forecasting operations scheduling MRP and workloads what do we do today operations what are the various schedules what will be the probable on time delivery of the particular product what will be the material requirement lining what will be effect on the material requirement and processing naturally it also depends upon the cash flow and new product and line services which we discussed just now the various elements of the forecasting are the forecasting should be timely should be reliable it should be as accurate as possible it should be meaningful and somewhere documented and finally it should be very easy to use it should not have too much of statistics and too much of confusions related to the forecasting which probably ordinary person is unable to understand the various steps in the forecasting are you have to determine the objective of the forecasting for which particular objective we are trying to forecast what is the plan of the forecast short term medium term long term you have to decide they subdivide the task in of the forecasting determine the relative importance of the various factors associated in the forecasting just we discussed those factors there are a number of methods of forecasting we have to finalize a particular method or a combination of methods which will be suitable for our case once the forecasting method is selected then we have to collect and analyze the data study the correlation between self forecast and sales promotion plan study of competitors activities generally called as benchmarking it is not easy job we have to collect the data from competitors through variety of primary and secondary sources then finally prepare the sales forecast once the self forecast is ready we have to evaluate and adjustment with the help of fine tuning with the experience and the knowledge there are some limitation of the forecasting even though a lot of software have been involved a lot of expertise of many statistical techniques are also available still accuracy of the forecast and error of the forecast remains a point of debate no forecast can be accurate and what is the error of the forecasting it is deviating from the either side if I predicted X and the demand is more than X still also it is not accurate if I predict X and the demand is less than X still after it is inaccurate generally we tend to draw a conclusion that if the demand is less than the predicted one we say it is a limitation it is the accuracy of the forecasting is question the reverse is also equally true the limitation is it is basically assumed assumes slow mint of data and since the data assumption is a big question therefore guesswork and possibility of error automatically will definitely happen it is based on the past data past data may not be reflected in the future that as usual is a big challenge which remains in change in the consumer needs taste fashion style may cause inaccuracy in the forecast these are ever-changing requirements from the customer side there may be lack of history in case of new product forecast are not full proof and condition proof if there are changes in the general economy and country there may be lack of efficient and experienced sales force development of new product material methods may introduce error in the sales forecasting of a product so at the end of the session probably we have now understood what is the meaning of forecasting why forecasting important what are the various applications of the forecasting what are the limitations of the forecasting in the next session we will study what are the various methods of forecasting thank you thank you very much