Also, trends that affect such variables as labor turnover, retirement age, absenteeism, and tardiness need to be forecast for planning and decision making. Workers must be hired, trained, and provided with benefits that are competitive with those available in the firmвЂ™s labor market.

The personnel department вЂ“ It requires a number of forecasts in planning for human resources.

Decisions on issuing stock or debt to maintain the desired financial structure require forecasts of money and credit conditions. Forecasts also must be made for interest rates, to support the acquisition of new capital, the collection of accounts receivable to help in planning working capital needs, and capital equipment expenditure rates to help balance the flow of funds in the organization.В Sound predictions of foreign exchange rates are increasingly important to managers of multinational companies.В Long-term forecasts are needed for the planning of changes in the companyвЂ™s capital structure. Forecasts are needed for money and credit conditions and interest rates so that the cash needs of the firm may be met at the lowest possible cost. Forecasts of cash flows and the rates of expenses and revenues are needed to maintain corporate liquidity and operating efficiency.В In planning for capital investments, predictions about future economic activity are required so that returns or cash inflows accruing from the investment may be estimated. He or she must plan cash and borrowing needs for the companyвЂ™s future operations. On this basis, the manager must estimate the future cash inflow and outflow. If the company does not have enough capacity, it will require planning and budgeting decisions for capital spending for capacity expansion. As soon as the company makes sure that it has enough capacity, the production plan is developed. Production planners вЂ“ They need forecasts in order to: schedule production activities, order materials, establish inventory levels and plan shipments.В Other areas that need forecasts include material requirements (purchasing and procurement), labor scheduling, equipment purchases, maintenance requirements, and plant capacity planning.Market share, prices, and trends in new product development are also required.

Marketing managers вЂ“ They use sales forecasts to determine optimal sales force allocations, set sales goals, and plan promotions and advertising.More specifically, here are who and why they need to forecast: Further, top management needs forecasts for planning and implementing long-term strategic objectives and planning for capital expenditures.

Sales forecasts are especially crucial aspects of many financial management activities, including budgets, profit planning, capital expenditure analysis, and acquisition and merger analysis.ДЇorecasts are needed for marketing, production, purchasing, manpower, and financial planning. In business, forecasts form the basis for planning capacity, production and inventory, manpower, sales and market share, finances and budgeting, research and development, and top managementвЂ™s strategy. The objective of forecasting is to reduce risk in decision making. Probably the most important function of business is forecasting, which is a starting point for planning and budgeting. Management in both private and public organizations typically operates under conditions of uncertainty or risk.

Business forecasting example