Page 60 - BA1 Integrated Workbook STUDENT 2018

Chapter 6

Forecasting

3.1 What is forecasting?

A forecast is a prediction of future events and their quantification for
planning purposes.

CIMA Official Terminology

Forecasting can be undertaken in a number of different ways.

3.2 Statistical models

There are two main statistical models that can be used to aid forecasting:

 regression analysis – good for looking at relationships between
different variables

 time series analysis – good for looking at how a factor is expected to
vary over time.

3.3 Other models

Forecasting doesn’t just have to involve statistical analysis. Other
techniques include:

 think tanks – panel of experts have an unstructured discussion

 the Delphi technique – panel of experts do not meet

 brainstorming – group from all levels of the company come up with
ideas

 derived demand – analysing the level of one economic activity to
allow the level of another aspect to be deduced.

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