What is Forecasting in Engineering?

Forecasting is a systematic effort to anticipate future events or conditions. The most well known type of forecast may be that of the meteorologist who prepares daily weather forecasts that help us decide how to dress each day and whether to take an umbrella when we leave for work in the morning. Other common forecasts are those that anticipate future economic conditions, traffic patterns, and even the size and number of classrooms that will be needed in local schools.

An engineering manager must be concerned with both future markets and future technology and must therefore understand both sales and technological forecasting and the most important premise or assumption in planning and decision making is the future sales. almost everything for which we plan is based on this assumption.

Forecasting is the most important part of planning since the results of both lie in the future. The fierce nature of today's competitive landscape has forced engineering organizations to operate more efficiently, not just on a day-to-day basis but also in planning for the future. Competitive advantage requires more than estimates and educated guesses. Even business expertise can take you only so far.

Engineering managers as well as other managers need a wide range of integrated capabilities for time series analysis and forecasting, econometrics and systems modeling, and financial analysis and reporting, with direct access to the internal/external commercial data warehouses/marts. With the power of an effective forecasting, managers can:

• Forecast demand related to their products and services.
• Decide staffing and resource needs.
• Predict customer and market behavior.
• Analyze investment options.
• Perform production plant site selection analysis.
• Make effective pricing decisions.
• Plan and understand markets for their products and services.

Things that can be forecast:

• Production levels.
• Technological developments.
• Needed manpower.
• Governmental regulations.
• Needed funds.
• Traning needs.
• Resource needs.
• Sales levels (The most critical information to forecast)

There are many techniques for forecasting. But all depend on two different types of data and/or information namely Qualitative Information, and Quantitative Information. They will be mentioned in detail in a different topic.