Issue link: https://industrialmanagement.epubxp.com/i/285723
march/april 2014 27 Broadly speaking, forecasting is a method for translating past experience into future estimates to help managers make the best possible judgment about what to do next. It is a process for analyzing future possibilities to develop strategies for more desirable futures. The term "planning" is the link that integrates forecasting and decision- making. An organization establishes goals and objectives, seeks to predict environ- mental factors and then selects actions it hopes will result in the attainment of these goals and objectives. The need for forecasting arises as management attempts to decrease its dependence on chance and become more scientific in dealing with its environment. Forecasting is designed to reduce the uncertainty in decision-making. However, it cannot completely eliminate such uncertainty, as it is the environment itself that is continually variable. In today's world of rapidly changing business trends, one's judgment about the environment (i.e., the forecast) can mean the difference between success and failure. Organizations that cannot react quickly to new conditions and cannot foresee the future with any degree of accuracy are doomed to extinction. The need to make decisions based on judgments about the future course of events extends beyond the profit- oriented sector of the economy. Management in all organizations needs to make strategic decisions and allocate resources. Hospitals, libraries, blood banks, police units, fire departments, urban transit authorities, credit unions and myriad federal, state and local government units rely on forecasts of one kind or another. Forecasting is a continuous process of learning and adaptation. Seeing the future All formal forecasting procedures involve extending the experiences of the past into the future. Thus, they involve the continuity assumption that Forecasting is a continuous process of learning and adaptation. EXECUTIVE SUMMARY Forecasting, although fraught with peril, helps companies prepare for the future. Making the wrong choices can cost your company in a host of ways, from excess inventory to not enough products in the supply chain pipeline. Identifying and ameliorating biases can help eliminate unnecessary errors, leading to improved results and better corporate performance. IM MarApr 2014.indd 27 3/24/14 11:02 AM