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    Planning and Decision Aids Planning and Decision Aids

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    Christian Catherine Laderas Gonzalo
    This document discusses planning and decision aids that managers use, including environmental scanning techniques, forecasting, and forecasting methods. Specifically: 1. Environmental scanning techniques like SWOT analysis, competitor intelligence, and global scanning help managers assess their organization's environment. 2. Forecasting is important for planning and decision-making in areas like production, budgeting, and marketing. Quantitative forecasting uses mathematical models and data to predict outcomes, while qualitative and judgmental forecasting rely on expert opinions. 3. Common forecasting methods include time-series analysis of historical data, explanatory models that consider causal factors, and judgmental techniques like salesforce composites or juries of executive opinion. The appropriate method depends on

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    Planning and Decision Aids Planning and Decision Aids

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    Christian Catherine Laderas Gonzalo
    30 views3 pages
    This document discusses planning and decision aids that managers use, including environmental scanning techniques, forecasting, and forecasting methods. Specifically: 1. Environmental scanning techniques like SWOT analysis, competitor intelligence, and global scanning help managers assess their organization's environment. 2. Forecasting is important for planning and decision-making in areas like production, budgeting, and marketing. Quantitative forecasting uses mathematical models and data to predict outcomes, while qualitative and judgmental forecasting rely on expert opinions. 3. Common forecasting methods include time-series analysis of historical data, explanatory models that consider causal factors, and judgmental techniques like salesforce composites or juries of executive opinion. The appropriate method depends on

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    This document discusses planning and decision aids that managers use, including environmental scanning techniques, forecasting, and forecasting methods. Specifically: 1. Environmental scanning techniques like SWOT analysis, competitor intelligence, and global scanning help managers assess their organization's environment. 2. Forecasting is important for planning and decision-making in areas like production, budgeting, and marketing. Quantitative forecasting uses mathematical models and data to predict outcomes, while qualitative and judgmental forecasting rely on expert opinions. 3. Common forecasting methods include time-series analysis of historical data, explanatory models that consider causal factors, and judgmental techniques like salesforce composites or juries of executive opinion. The appropriate method depends on

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    30 views3 pages

    Planning and Decision Aids Planning and Decision Aids

    Uploaded by

    Christian Catherine Laderas Gonzalo
    This document discusses planning and decision aids that managers use, including environmental scanning techniques, forecasting, and forecasting methods. Specifically: 1. Environmental scanning techniques like SWOT analysis, competitor intelligence, and global scanning help managers assess their organization's environment. 2. Forecasting is important for planning and decision-making in areas like production, budgeting, and marketing. Quantitative forecasting uses mathematical models and data to predict outcomes, while qualitative and judgmental forecasting rely on expert opinions. 3. Common forecasting methods include time-series analysis of historical data, explanatory models that consider causal factors, and judgmental techniques like salesforce composites or juries of executive opinion. The appropriate method depends on

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    PLANNING AND DECISION AIDS

    PLANNING AND DECISION AIDS


    This session and the one follows shall introduce the planning tools and techniques that managers have at
    Their disposal to assist them in performing the management functions. Management Science or Operation
    Research is a management perspective aimed at increased decision effectiveness by use of sophisticated
    mathematical models and statistical methods.
    TECHNIQUES FOR ASSESSING THE ENVIRONMENT
    Several techniques have been developed to assist managers in assessing the organization's environment.
    ENVIRONMENTAL SCANNING
    Environmental scanning is the screening of large amounts of information to anticipate and interpret changes in
    the environment. It's used by both large and small organizations, and research has shown that
    companies with advanced environmental scanning systems increased their profits and revenue growth.
    SWOT analysis is an analysis of an organization's strengths, weaknesses, opportunities, and threats. It
    brings together the internal and external environmental analyses in order to identify a strategic niche the
    organization might exploit.
    Competitor intelligence is an environmental scanning activity that seeks to identify who competitors are,
    What they are doing and how their actions will affect the organization.
    Another type of environmental scanning is global scanning in which managers assess the changes and
    trends in the global environment. Environmental scanning provides
    the foundation for developing forecasts, which are predictions of outcomes.
    There are three categories of forecasting techniques.
     Quantitative forecasting applies a set of mathematical rules to a series of past data to predict
    outcomes.
     Qualitative forecasting uses the judgment and opinions of knowledgeable individuals to predict
    outcomes.
     Judgmental forecasting
    FORECASTING
    Forecasting is the process of predicting changing conditions and future events that may significantly affect
    the business of an organization.
    1. Forecasting is important to both planning and decision making.
    2. Forecasting is used in a variety of areas such as: production planning, budgeting,
    strategic planning, sales analysis, inventory control, marketing planning, logistics,
    planning, and purchasing among others.
    It's important to look at forecasting effectiveness. Forecasting techniques are most accurate when the
    environment is not rapidly changing.
    Some suggestions for improving forecasting effectiveness are as follows:
     Use simple forecasting techniques.
     Compare every forecast with "no change."
     Don't rely on a single forecasting method.
     Don't assume that you can accurately identify turning points in a trend.
     Shorten the length of the forecasts.
     Forecasting is a managerial skill and can be practiced and improved
    METHODS OF FORECASTING
    A. Quantitative forecasting relies on numerical data and mathematical model to predict
    future conditions. There are two types of quantitative forecasting most frequently used.
    1. Time-series methods used historical data to develop forecasts of the future.
    a. The underlying assumption is that patterns exist and that the future will resemble the past.

    b. Time-series methods do not in themselves predict the impact of present


    or future actions that managers might take to bring about change.
    c. A trend reflects a long-range general movement is either an upward or a downward direction.
    d. A seasonal pattern indicates upward or downward changes that coincide with particular points within a
    given year.
    e. A cyclical pattern involves changes at particular points in time that span longer than a year.
    f. Time-series are more valuable for predicting broad environmental factors
    than in predicting the impact of present or future actions.
    g. Because time-series rely on past trends there can be a danger in their use if
    environmental changes are disregarded.
    Explanatory or causal models attempt to identify the major variables that are related to
    or have caused particular past conditions and then use current measures of those variables (predictors) to
    predict future conditions.
    a. Explanatory models allow managers to assess the probable impact of changes in the predictors.
    b. Regression models are equations that express the fluctuations in the variable
    being forecasted in terms of fluctuations among one or more other variables.
    c. Econometric models are systems of simultaneous multiple regression
    equations involving several predictor variables used to identify and measure relationships or
    interrelationships that exist in the economy.
    d. Leading indicators are variables that tend to be correlate with the phenomenon of
    major interest but also tend to occur in advance of the phenomenon.
    B. Technological, or Qualitative, Forecasting is aimed primarily at predicting long-term trends in
    technology and other important aspects of the environment.
    The focus is upon longer-term issues that are less amenable to numerical analysis as quantitative approaches.
    The Delphi method and Scenario analysis can be used as techniques.
    C. Judgmental Forecasting relies mainly on individual judgments or committee agreements
    regarding future conditions.
    Judgmental forecasting methods are highly susceptible to bias. The jury of executive opinion is one of
    the two judgmental forecasting model.
    It is a means of forecasting in which organization executives hold a meeting and estimate, as a group,
    a forecast for a particular item.
    The Sales-force composite is a means of forecasting that is used mainly to
    predict future sales and typically involves obtaining the views of various
    salespeople, sales managers, and/or distributors regarding the sales outlook.
    The choice of which forecasting method to use depends upon the needs within particular forecasting situations.
    1. Quantitative forecasting methods:
    a.have a short-to-medium time horizon
    b.require a short period of time if a method is developed
    c.often have high development costs
    d.are high in accuracy in identifying patterns are low in accuracy in predicting turning points for time series, but
    medium for other methods.
    f. Are difficult to understand
    2. Technological forecasting methods:
    a. have a medium-to-long time horizon
    b. require a medium-to-long time
    c. have medium development costs
    d. are of medium accuracy in identifying patterns
    e. are of medium accuracy in predicting turning points
    f. are easily understood.
    3. Judgmental forecasting methods:
    a. have a short-to-long time horizon
    b. require a short time
    c. have low development costs
    d. are of medium-to-high accuracy in identifying patterns
    e. are of low accuracy in predicting turning points
    f. are easily understood
    REFERENCE
    http://www.zeepedia.com/read.php?planning_and_decision_aids-
    i_methods_of_forecasting_benchmarking_principles_of_management&b=54&c=20

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