ForecastingIn the business world, being able to predict how a particular product will sell and how many will need to be made is an important part of remaining competitive. Forecasting the performance of your product(s) is a key part of budgeting, capital improvements and investment for any business. How would you grow your business if you didn't know that for the next 2 years, your average performance for each product would be X.? By knowing this, you can estimate your income and then budget for your future. If the forecast is too high, inventories will be too high and money will be lost due to overproduction. If the forecast is too small, demand for the product or service will exceed inventory and money will be lost because the customer cannot purchase the product and future business may also be lost. There are several methods that can be used to forecast demand. . These are not limited to, but may include: • Baseline forecasts • Panel consensus • Historical analogy • Time series analysis • Delphi All of these methods work fundamentally the same way. They all try to predict how much of a product or service will be purchased in a given period. However, the way these methods arrive at their conclusions is different. Panel Consensus The panel consensus forecasting method uses people internal to the company at all levels of the organization to create its forecasts. The process takes place through open meetings with a free exchange of ideas. The downside to this method is that some people at a lower level in the company may feel intimidated by higher-level employees during these meetings. They may be too hesitant to contradict a vice president's thoughts on the request and, therefore, not offer their opinion. This limits the open nature of the method and can distort the results. (Chase 2005 pg514) Historical analysis Historical analysis forecasts the demand for a new product. It bases the forecast for a product on the demand for a similar product. An example would be forecasting demand for a new type of camera film based on sales of the company's latest camera on the market. This is an accurate way to predict sales of products that share market share with similar products. (Chase 2005 pg514)Grass RootsA company can run study after study, but these gauges can still fail because they don't deal directly with customers or consumers in the market..