A forecast can be described as prediction of future events. The forecasting process commonly involves manipulation of historical data using various mathematical models. The process is commonly used by operations managers to approximate how the business will perform in the future. Many firms depend on forecasting techniques to scale their production, financial, marketing, and staff planning processes.
Various techniques can be used for qualitative and quantitative forecasting. Qualitative techniques exploitperceptions, decisions, experience and many other factors that are usually hard to measure.
On the other hand, quantitative forecasting commonly utilizes company records along with causal, associative and relations data to project future trends in demand. There are various techniques used in quantitative forecasting which may include thesimple approach, exponential smoothing, among other projection techniques. Linear regression is used to establish the associative model of forecasting. Qualitative forecasting is rarely used to identify future projections in a business setting.
Most quantitative forecasting approaches employ the use of mathematical formulas.Historically, forecasting was carried out using manual techniques. With the rapid advancement in computer technology, forecasting is now accomplished using software packages such as Forecast PRO, SAP, AFS, SAS, SPSS and Excel.
The case study was conducted on the Southwestern University. The university is one of the most premier institutions in Texas and, currently, enrolls more than 20,000 students. The Southwestern University (SWU) is a major influence in the world of football and has always been in the top 20 college teams in the whole of the United States.
With the desire to reach the first position in the rankings, the college hired a legendary coach. With the arrival of the new coach, the attendance in the five Saturday home games steadily began to increase as shown in the tables below. The SWU stadium was constructed in 1953, and has a seating capacity of 54,000. With the rapid increase in the number of people attending the five annual matches, the coach started to push for expansion of the University stadium.
The president of SWU, requested for a forecast to be used as a guideline to show when the current capacity will be exceeded. The president asked his deputy to consider conducting a revenue projection for the coming years. The 2010 cost for attendance was assumed to be 50$, with a 5 percent increase per annum.
Table 1: 2004 stadiumattendances