Forecasts are a critical part of a manager’s function. Demand forecasts drive the production, capacity, and scheduling systems in a firm and affect the financial, marketing, and personnel planning functions.

In this chapter, we introduced three types of forecasting models: time series, causal, and qualitative. Moving averages, exponential smoothing, trend projection, and decomposition time-series models were developed. Regression and multiple regression models were recognized as causal models. Four qualitative models were briefly discussed. In addition, we explained the use of scatter diagrams and measures of forecasting accuracy. In future chapters, you will see the usefulness of these techniques in determining values for the various decision-making models.

As we learned in this chapter, no forecasting method is perfect under all conditions. Even when management has found a satisfactory approach, it must still monitor and control its forecasts to make sure that errors do not get out of hand. Forecasting can often be a very challenging but rewarding part of managing.