Operational Management: Forecasting

Forecasting is assumption about future events that is predicate on data from the past and present and analysis of trends. Forecasting can be done for the week, month, and year which based on the management's experience, knowledge, and judgment. Some of Techniques methods are executive opinions, Delphi method, exponential smoothing, moving averages, regression analysis, and trend projection. One of the Chocolate Company near to my house uses the time series method to forecast the demand of the chocolate in the market. They does analysis on the market. They uses moving average method. They collect and store the last five month sales in the market and take the average of all the data and use these data to predict the amount of chocolate need to manufacture for next month.
For example: the last five month sales data are as follow
 Month Amount Jan 57 Feb 46 Mar 44 Apr 52 Mar 58 The five month moving average of chocolate would be: 57+46+44+52+58 / 5= 51.4 such that the forecasted chocolate for next month i.e. for June is 51. And further to predict the data for July. Let assume the amount of chocolate sold in June is 45 then estimated chocolate for July is 46+44+52+58+45 / 5= 49 units. The company is using these method because it is simple, easily understood and it’s provide stable forecast. Chocolate is very sensitive food item and it consumption date is 6 months from the date of manufacture so the company want to forecast only what a market demand for it. It is relevant to them to use this method. Also they are using seasonal method to forecast the sales of chocolate because in the Nepal the consumption of chocolate is very high in the festival. They forecast approximately 3 times more than as usual in the month of July/ Aug. because in Nepal we had Dashin and Tihar festival in this month.