Why Do You Need A Forecast?

In todays business world, its all about being prepared for the future

, understanding how your business works. Forecasting is like trying to drive a car blindfolded while following directions given by someone else looking out of the rear window. Forecasting is used in various departments in the organization such as finance, sales, manufacturing and so forth. To manage the budget and forecast process efficiently, first you need to have the necessary tools and completely know what you are doing. Although there is some useful software out there, most budgets are created in spreadsheets in Excel.

Different forecasts work best for different situations. There are different factors as the type of data, the type of business, whether you are tracking longer trends or shorter trends and so forth.Use Moving Average or Exponential smoothing if there is:

no trend,

no seasonality

varying levels

Keep in mind that if you use a Moving Average model, the shorter the Moving Average is the more sensitive it will to actual data. If you use an Exponential Smoothing the larger the alpha is, it will be more sensitive to actual data. Also ExponentialSmoothing model is preferred forecasting for shorter time periods (a day to a quarter) whereas Moving Average is used over longer periods (more than 3 months or 6 months, a year or longer).

Exceldummies.com has collective experience forecastingin Excel. All necessary components of the forecasting techniques in Excel 2010 program are covered in our exclusive course that youll be glad you have taken and mastered.

by: Gamze Gigi Arslan

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