Generally, the manager and the forecaster must review a flow chart that shows the relative positions of the different elements of the distribution system, sales system, production system, or whatever is being studied.
If it This clarifies the relationships of interacting variables.
Techniques vary in their costs, as well as in scope and accuracy.
The manager must fix the level of inaccuracy he or she can tolerate—in other words, decide how his or her decision will vary, depending on the range of accuracy of the forecast.
In virtually every decision they make, executives today consider some kind of forecast.
Sound predictions of demands and trends are no longer luxury items, but a necessity, if managers are to cope with seasonality, sudden changes in demand levels, price-cutting maneuvers of the competition, strikes, and large swings of the economy.
The flow chart should also show which parts of the system are under the control of the company doing the forecasting.