Question

List and describe the general forecasting principles and the seven steps of the forecasting framework.

Answer 1

Forecasting principle are generally of three types

1.Forecasting are rarely perfect

2.Forecasting are more accurate for Groups than Individual

3.Forecasting are more accurate for shorter term than long term

Seven steps of the forecasting framework

1.Recognition of factors that effect the overall business

2.Identification of relevant scenarios

3.Selection of a baseline

4.Planning Basic Budget based on baseline

5.Planning of alternative budgets based on alternative scenarios

6.Identification of targets

7.Adjustment of business accordingly as targets are surpassed.