CHAPTER ONE
INTRODUCTION
Planning is an integral part of a manager’s job. If uncertainties cloud the planning horizon, it can be quite difficult for a manager to plan effectively. Forecasting help managers by reducing some of the uncertainties, thereby enabling them to develop more meaningful plans than they might otherwise. A forecast is a statement of the future. At one time or another, we have all witnessed different sorts of forecasts that were flops, even though most of the time the forecasts are closed in predicting what the actual result will be. Forecasting sales and productivity is a lot like forecasting the weather. In both instances, there is no such thing as a sure bet. Predictions usually turn out to be in the ballpark, but occasionally they miss the mark completely. Moreover, in both instances, the forecasts serve as a basis for planning. However, weather forecasts influence travel and recreation plans, choice of clothing each day and whether to walk or ride to places. Farmers rely on weather forecasts to determine when to plant and harvest and when to take precautionary steps. In businesses and organizations, forecasts are the basis for capacity planning, budgeting, sales planning and so on.
Subsequently, forecasts play such an important role in the planning process because they enable managers to anticipate the future and to plan accordingly. In a sense, there are two uses for forecasts. One is to help managers plan the system and the other is to help them plan the use of the system. Planning the system generally involves long-range plans concerning the types of products and services to offer, what facilities and equipment to have, where to locate and so on. Planning the use of the system refers to short-range and intermediate-range planning, which involve such tasks as planning inventory and workforce levels, planning, purchasing and production, budgeting and scheduling.
However, this project work looks into the effect of forecasting techniques on sales and productivity, how they affect production, planning and control, how the sales and productivity level is affecting the manager’s decision on whether to increase output and whether to provide more motivational incentives in order to improve productivity. The forecasting techniques we apply on sales and productivity help in providing the manager with basis on how he can plan the future, the nature of future sales, how sales can affect the production decisions and what will be the sales functions of the organization.
There are many different kinds of forecasting techniques available and no one technique works best in every situation. When selecting a technique for a given situation, the manager or analyst must take a number of factors into consideration. However, the two most important factors are cost and accuracy. How much money is budgeted for generating the forecast? What are the possible costs of error and what are the possible benefits that might accrue from an accurate forecast? Generally speaking, the higher the accuracy, the higher the cost, so it is important to weigh cost – accuracy trade- offs carefully. The best forecast is not necessarily the most accurate or the least costly, rather, it is some combination of accuracy and cost deemed best by management.
BACKGROUND OF THE STUDY
A close look to this project work shows that forecasting techniques have an effect on the future sales performance of an organization, most especially confectionary firms. Future decisions on production are affected by the level of sales performance; this is why the project provides detailed information on how managers can base their decisions on sales performance by forecasting the future of the two functions.
The project is designed to help managers, writers and researchers operating in this sector or business have a good insight on how sales can be forecasted to provide them with the necessary information that will help them in taking future decisions. This can further be observed or justified when we consider how other large scale organizations are using various techniques to determine the future of their sales performance, how forecasting can make an effect on the sales performance and what will be the position of sales and productivity in years to come.
The study also shows the various forecasting techniques available to the manager. How can organization select the best technique among the techniques available to it. by means of considering accuracy and cost associated with the technique, rather, it is some combination of accuracy and cost deemed best by management. Since the project work is on the effect of forecasting techniques on future sales performance of an organization, the need to select the best technique to suite this problem has also been considered.
STATEMENT OF THE PROBLEM
A great number of organizations have failed in their ways of applying a forecasting technique that will provide the required and accurate result. The problems associated with forecasting techniques have been difficult for some organizations to identify, which led them to choosing the wrong technique and as a result, they fail. The major problem associated with forecasting techniques is the problem of knowing the historic data of that particular event one is basing his forecast. This is so because many techniques depend on historic data.
There is also the problem of selecting the accurate technique that goes with time. This means the technique has to be timely and at the same time accurate. This problem is so alarming because the organization that wrongly chose the inaccurate technique will have a devastating negative effect. The result can not be reliable and cost is also incurred. This study made a close evaluation of the problems associated with forecasting techniques on future sales and productivity, most especially, in foods and confectionary firms and lasting solutions have been provide that will guard against these problems.
OBJECTIVES OF THE STUDY
Any work that is been performed has a purpose or objective for such task. This project work can’t be an objection to this assertion. The objectives of this study is to examine the different forms of forecasting techniques, there effect on performance. It also study the concepts of forecasting techniques available and how they affect the decision made by various organizations.
This study is also concerned with the importance of forecasting techniques on the sales and productivity of confectionaries, how it affects their decisions in terms of future decision making either on sales or future productivity. It helps the organizations to make an effective decision that will guide them in attaining their future objectives.
It should also be noted that the project aimed at bringing out clearly the differences between sales and productivity in an organization. The two concepts are very crucial to existence and future decisions of any organization. At the end of it all, the study will provide scholars, researchers and students with a tool for forecast on future sales and productivity.