Forecasting at Ebbd Essay Example

style="text-align: justify;">Discussions are underway to include new products from existing suppliers, although there is currently no strategic forecast plan in place. The decision to incorporate new products into the current product lines is made by observing the offerings of both current and other suppliers, including competitors.

Introducing a new product comes with risks. To forecast the success of a new product, it is helpful to review its past performance. If EBBD has previously introduced similar products in the same markets, these historical records can be reliable predictors for future outcomes. However, there is no available data on the performance of previous new products, which makes it challenging to establish a strong forecasting strategy. As an alternative, EBBD should analyze the histories of comparable products introduced by competitors as they often provide useful insights for predicting future outcomes.

Observation # 4: Determining Inflation Factors.

At present, it is difficult to accurately determine inflation factors. EBBD suppliers transfer their inflation costs to EBBD every quarter, while EBBD makes estimations of its own costs. As time goes by, even a small inflation rate can greatly diminish purchasing power. In the following paragraph, I will explore potential remedies for this issue.

Possible Solutions

Here are several potential solutions that can be applied to the observations discovered during my analysis.

EBBD utilizes a Quantitative forecasting method that includes historical data for short term forecasting. To optimize this approach, implementing a "Time Series" forecasting method is suggested. The objective of this method is to identify patterns in past values of a product, assuming that the historical pattern will continue. By extrapolating this pattern into

the future, future values can be predicted. This method is particularly useful when historical data patterns remain consistent. Integrating the Time Series Method into EBBD's current sales forecast approach would provide a more accurate assessment, as both methods can be evaluated, their results can be combined, and the resulting average can serve as a forecasting indicator.

Strategic planning heavily relies on Long Range Forecasting, which takes into account various factors such as market opportunities, regional market conditions, consumer behavior, consumer expenditure by region, and environmental factors. However, EBBD currently does not have a method for long-range forecasting. To address this issue, one possible solution is to adopt the Consensus Forecast (Adaptive Forecasting) methodology. This approach combines multiple forecasting methods that are developed using different approaches in order to generate future predictions. The advantage of this method lies in its ability to minimize behavioral biases that may impact individual forecasts by merging them together.

Combining forecasts helps to improve accuracy by reducing errors. I suggest using two methods for consensus forecasting. The first method is Qualitative, which relies on expert opinions and can be further divided into smaller methods. The second method is an econometric model, which economists use to predict economic trends by analyzing past relationships among variables like consumer behavior, spending, income, tax rates, employment, socio-economic factors, regional economy, and other applicable factors. Implementing this approach would provide EBBD with effective tools for long range forecasting.

The current new product forecasting strategy relies on the actions of current suppliers and others, including competition. A forecasting plan is currently nonexistent. To address this issue, a two-fold approach can be adopted. Firstly, a

Qualitative forecasting method should be implemented. This method is effective for new products when historical data is limited or unavailable. Qualitative methods encompass market research techniques such as panels, questionnaires, test markets, surveys, etc. Additionally, forecasts can be developed based on the life cycles of similar products, services, or processes through product life-cycle analogy. Finally, expert judgment from management, sales force, or other knowledgeable individuals can be utilized.

EBBD currently estimates inflation factors which are crucial for financial planning. Without an accurate gauge of the inflation rate, both EBBD and retailers will be unable to accurately forecast their current and future expenses. Inflation refers to the steady increase in prices of goods and services, typically measured as a specific annual percentage. This ultimately reduces the purchasing power of currency, as it decreases the amount of goods or services that EBBD can obtain for the same amount of money. To develop a measurable tool for inflation, EBBD must first identify the causes.