Process and Project Planning Essay Example | Topics and Well Written Essays - 2000 words

Process and Project Planning - Essay ExampleThis report examines the business of N&F manufacturing by analysing the models that could be use to forecast gross revenue in order to villein eh theater determine potential gross revenue and avoid losses. promise Models and their Significance Sales and the revenue that is effected from gross sales ar very significant to any organization that operates with the aim of maximizing profits. The relevance of sales revenue cannot be ignored since it helps an organization meet its expenses such(prenominal) as payment of its employees, raw materials and merging fixed costs. Due to their significance, it is necessity for an organization to forecast the expected sales over a disposed period of time in order to determine its level of production. Effective sales forecast is necessary for future planning of an organization. For instance, accurate sales forecast could enable an organization decide its future trading operations especially in te rms of diversification. A company is able to choose the line of diversification given up correct sales forecasts for the different lines of operations. Most industries are characterised by free entry and exit whereby saucily firms could enter the industry patch different companies could leave the industry. Sales forecasts are relevant in dowry naked as a jaybird entrants venture into a given profitable industry. The sales forecasts included in business plans are vital for decision on entry into a given industry. As noted by Morwitz (2001), sales forecasts are a central section of a business plan given that a new company has not historical sales data. The forecasts are used by business financial providers such as banks to provide capital for investors. Lastly, sales forecasts are important in determining the amount of take stock to be kept by an organization (Morwitz, 2001). Sales Forecasting Model for N&F Manufacturing Forecasting involves various methods that do forecasts ma inly from judgmental sources and statistical sources of data. Judgmental forecasting methods have been called qualitative while methods that derive their data from statistical sources have been referred to as either quantitative or time serial publication methods. In spite of the differences among the different forecasting methods, judgmental and statistical methods are integrated together and and then applied simultaneously while undertaking sales or cost forecasts of an organization. Although many methods could be used to forecast the sales of Air New Zealand, this study seeks to explain two methods that are direct sales extrapolation and causal approaches to sales forecasting. a) Direct Sales Extrapolation Extrapolation methods utilize historical statistical data on sales of a company to predict the future performance of the firm in terms of sales revenue. The or so common of extrapolation technique is the exponential smoothing that assumes that more recent data of sales of an organization is weighted heavily. The other assumption and principle of this method is that it utilizes long time series data for sales of a firm when developing a forecast model. According to Meade (2001), reliability of the data used in the study is a principle that cannot be ignored. The reliability of data used for forecasting is not debatable if the forecast is to be useful to the organization. Simple accurate, timely and