Business and Economic Forecasting: Qualitative and Quantitative Methods, Lecture notes of Managerial Economics

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BUSINESS AND

ECONOMIC

FORECASTING

By:

Trisha Aika

Suficiencia

Zaireen Tanalgo

Elmarie Shen Billena

Marchelle Falle

Elline Anonuevo

FORECASTIN G

• is about predicting the future as accurately as possible, given all the information available including historical data and knowledge of any future events that might impact the forecasts

QUALITATIVE ANALYSIS Personal insight – the most basic form of qualitative analysis forecasting in which an informed individual uses personal or company experience as a basis for developing future expectations. Panel Consensus – when the informed opinion of several individuals is relied on - assumes that several experts can arrive at forecasts that are superior to those that individuals generate. Delphi Method – members of a panel of experts individually receive a series of questions relating to the underlying problem EXPERT OPINION

SURVEY TECHNIQUES

• generally use interviews or mailed questionnaires that ask firms, government agencies, and individuals about their future plans
• surveys asking about capital budgets, sales budgets, and operating budgets. QUALITATIVE ANALYSIS (cont.)

Circular trend - the long run pattern of increase or decrease in a series of economic data Cyclical fluctuation – describes the rhythmic variation in economic series tat is due to a pattern of expansion or contraction in the overall economy Seasonal variation/ Seasonality - is a rhythmic annual pattern in sales or profits caused by the weather, habit, or social custom, TREND ANALYSIS AND PROJECTION (cont.) TRENDS IN ECONOMIC DATA

BUSINESS FORECASTING Short-term forecasts are needed for scheduling of personnel, production and transportation. As part of the scheduling process, forecasts of demand are often also required. Medium-term forecasts are needed to determine future resource requirements in order to purchase raw materials, hire personnel, or buy machinery and equipment.

• is the process of making predictions about the business

Indicator Approach – depends on the relationship between certain indicators, remaining relatively unchanged over time. Econometric Modeling – a more mathematically rigorous version of the indicator approach. Time Series Method – collection of different methodologies that use past data to predict future event. QUANTITATIVE MODELS

• (^) there is no human element in the analysis because this is concerned solely with data and avoid the fickleness of people underlying the numbers.
• (^) Predict variable like sales, gross domestic product, housing prices and so on, will be in the long-term, measured in months or years. MODELS :