Chapter Overview
        Introduce Business Forecasting.
        Review Subjective Forecasting Methods.
        Introduce two simple “Naïve” Forecasting 
         Models.
        Develop Criteria for Evaluating Forecast 
         Accuracy
         Introduction
          What is forecasting?
             “Forecasting is an attempt to foresee the future 
              by examining the past.”
             Forecasts require judgment
             Most estimates obtained in quality forecasting 
              are derived in an objective and systematic 
              fashion and do not depend solely on subjective 
              guesses and hunches of the analyst.
             Forecasting and Decision Making
              Example:
                   Decision to “Whether to build a new factory”
                   Requires forecasts on
                       Future demand, technological innovations, cost, prices, 
                        competitor’s plan, labor, legislation, etc.
              Most forecasting required for decision making is 
                handled judgmentally in an intuitive fashion, often 
                without separating the task of forecasting from 
                that of decision making.
      Forecasting and Decision making
        Systematic, explicit approaches to forecasting can 
        be used to supplement the common sense and 
        management ability of decision makers.
        All types and forms of forecasting techniques are 
        extrapolation, that is, predicting within the existing 
        data. 
        Quantitative forecasting techniques should be used 
        in with analysis, judgment, common sense, and 
        business experience in order to produce an 
        effective forecasting outcome. 
        Advantages and Disadvantages of Subjective 
        Methods
         Subjective (qualitative or judgmental) forecasting 
           methods are sometimes considered desirable 
           because they do not require any particular 
           mathematical background of the individuals 
           involved.
         Subjectivity is the most important advantage of 
           this class of methods. There are often forces at 
           work that cannot be captured by quantitative 
           methods.