BUSN603 Assignment 1 - Team C

1 Assignment 1 - Business Forecasting: F&B Goods and Services Aubrey Ford, Donna Cook, Eva Thomason, Jacob Ernst, Jedsen Nunes, Moatasim Al Khatib, Rian Ellis American Public University BUSN603: Quantitative Analysis Dr. Xiaodong Wu May 31, 2020
2 Introduction Business forecasting is the process of calculating future values by using information on current and past data, these data are then used as a guide for businesses in making decisions. There are various methods used for business forecasting, which include casual models, time-series methods, trend projections, and regression analysis as well as other several methods. In this paper we will conduct an analysis using the time-series method and regression to forecast the food and goods service industry, aiming not for a 100% accurate forecast but for a reasonable and unbiased one. (Gillilad, Tashman, & Sglavo, 2015). The purpose of a forecast for any business is to strategically plan for its future by identifying the goals needed to positively move the business forward and to assess the risks of all controllable and uncontrollable risks of all possible scenarios. Forecasting is a tool used to predict economic events and their impact on organizations. (Stroud, n.d.) Elements of Good Business Forecasting It is important for businesses to choose a model that is relevant to their future goals, and to consider limiting factors such as human error and bias. It is also beneficial to continuously monitor the performance and effectiveness of the chosen model in order to quickly identify any errors. Furthermore, it is crucial to make sure that the problem is clearly defined and that the important data are gathered from designated sources and personnel before starting the business forecasting model, to make sure that the outcomes are unbiased and are clearly identified. Good forecasts have two different
3 primary functions: the generation and control; the generation involves gathering all of the necessary data to build outcomes, while the control involves taking the steps to monitor the effectiveness of the forecast model as time goes, to ensure that the necessary changes are made to improve the model. (Stroud, n.d.). Challenges with Business Forecasting In order for businesses to maintain fiscal responsibility they would need to follow a budget, unfortunately this might hinder the effectiveness of a business forecast by limiting companies to make immediate changes due to lack of funds. (Bogiages, 2015) Also, many businesses tend to constantly change which can sometimes make it difficult for companies to come up with probable outcomes when predicting future operations. Therefore, it should be understood that no business forecast is going to be completely reliable so it is critical for managers to have the ability to recognize these forecasting errors and handle them in a timely manner. Forecasting Methods Causal Models, Time-Series Method and Trend Projections Casual models are used when a model needs to include variables that are influenced by other variables, while the time-Series method focuses on predicting future values that are based on a single known variable in the historical data. The time-series method takes measurements over a series of consecutive periods of time; these measurements can be consecutive hours, days, months, or in the case of this paper, quarters periods. Trend, cynical, seasonal, and random components are the different possibilities that time-series forecasting method can have.
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