Prediction is concerned with future certainty; forecasting looks at how hidden currents in the present signal possible changes in direction for companies, societies, or the world at large (Saffo, 2007)

Information about Forecasting

Despite the fact that it is impossible to predict future development with total accuracy, forecasting has been an important concept within business (Davis, 1993).

Identifying the purpose of the forecast is important to determine the accuracy level required and the resources needed to obtain it (Lysons and Farrington, 2006). When forecasting is used to predict demand, it requires understanding of demand patterns and the way factors such as product life cycles, competition, and changing market dynamics impact on these patterns (Boyer and Verma, 2010; Lysons and Farrington, 2006). In the supply chain, forecasting can help to deal with the 'bullwhip effect' caused by the distorted flows of information up and down the supply chain. Excessive inventory quantities, poor customer service, cash flow problems, stockouts, high material costs, overtime expenses and transport costs, which cause the 'bullwhip effect' can be avoided by accurate forecasting (Handfield and Nichols, 2002; Monczka et al., 2009; Porasmaa and Ojala, 2011).

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