Forecasting is an important aspect of a business that aims at reducing the area of uncertainty that surrounds management decision-making. This is with respect to important aspects such as costs, production, waste reduction, profits and so on and offers guidance using history, experience, and knowledge as markers (Das 217). Forecasting essentially employs the micro and macro forecasting models. There is an important distinction between micro-forecasting and macro-forecasting. Micro-forecasting model is a detailed product unit forecast while macro-forecasting involves forecasting the market in total.
McDonalds’ forecasting can be on areas of sales, product mix, and stocks or product availability. The sales forecast is useful in indicating how fast the company is expected to grow and often represents the volume of activity expected in the business (Stice and Stice 34). The sales forecasting relies heavily on macro-forecasting and industry forecasts model. Information on sales from previous years and from outlets can be used as the prime mover of financial planning, working capital, budgeting, and production.
Stock forecasting is an important micro-forecasting model that deals with aspects such as availability of products and reduction of wastage based on the customer use of the products. In stocks forecasting, McDonalds can be able to understand just what is required by the customers and the quantity or frequency of orders made. This helps the company to produce enough food products based on the current stocks information and this helps to reduce wastage by producing products adequate enough to fulfill the market demand. This serves to reduce wastage in the production of food products in particular and serves the demand aspect at all times by making enough products available.
Product mix forecasting relies on the product unit micro-forecasting and deals with the use of product mix history through time series to facilitate the understanding of what products are used most together or preferably in specific stores or markets. The range of products/services offered to a variety of customers can be broken into subsets so that an effective product mix can be established and used to satisfy customer demands. The focus here is on data on specific products in relation to the sales and stock information. This relates to the aspects of sales volume and availability in addition to customer services.
Works Cited
Das, Jay. An Introduction to Operations Management: The Joy of Operations. New York: Routledge, 2016. Print.
Stice, Earl, K. and James D. Stice. Intermediate Accounting. 19th ed. Mason, OH: Cengage Learning, 2013. Print.
