A Forecast Monitoring and Revision System for Top Management

Abstract

A simple, yet well-founded, forecast monitoring system is presented which is within the "numerate" ability of any competent manager. The system may also be used as a forecasting method in its own right. The bases of the system are the mean chart, "cusum" techniques and sampling distribution of range, encountered in quality control work. Initially a forecast of expected planning horizon total achievement is produced with associated confidence limits. Towards the end of the planning horizon the initial forecast is monitored and if it is out of control revisions are made to the horizon totals. The system has been successfully introduced into several firms for stock control, production control, budgeting and turnover analysis. A worked example is included for one firm.