Types of Forecasting techniques
Qualitative methods: These types of forecasting methods are based on judgments, opinions, intuition, emotions, or personal experiences and are subjective in nature. They do not rely on any rigorous mathematical computations.
Quantitative methods: These types of forecasting methods are based on mathematical (quantitative) models, and are objective in nature. They rely heavily on mathematical computations.
QUALITATIVE FORECASTING METHODS
- Executive Opinion – Approach in which a group of managers meet and collectively develop a forecast.
- Market Survey – Approach that uses interviews and surveys to judge preferences of customer and to assess demand.
- Delphi Method – Approach in which consensus agreement is reached among a group of experts.
- Sales Force Composite – Approach in which each salesperson estimates sales in his or her region.
QUANTITATIVE FORECASTING METHODS
TIME SERIES MODELS – Time series models look at past patterns of data and attempt to predict the future based upon the underlying patterns contained within those data.
Associative Models – Associative models (often called causal models) assume that the variable being forecast is related to other variables in the environment. They try to project based upon those associations.