Forecasting.

Forecasting is the process of making predictions of the future

based on past and present data and analysis of trends. A commonplace
example might be estimation of some variable of interest at some specified
future date. Prediction is a similar, but more general term. Both might refer
to formal statistical methods employing time series, cross-sectional or
longitudinal data, or alternatively to less formal judgmental methods. Usage
can differ between areas of application: for example, in hydrology the terms
"forecast" and "forecasting" are sometimes reserved for estimates of values
at certain specific future times, while the term "prediction" is used for more
general estimates, such as the number of times floods will occur over a long
period.Risk and uncertainty are central to forecasting and prediction; it is
generally considered good practice to indicate the degree of uncertainty
attaching to forecasts. In any case, the data must be up to date in order for
the forecast to be as accurate as possible. Forecasting is also known as the
process of estimation in unknown situations. Prediction is a similar,but more
general term. Both can refer to estimation of time series, cross-
sectional or longitudinal data. Usage can differ between areas of application:
for
example in hydrology, the terms "forecast" and "forecasting" are sometimes
reserved for
estimates of values at certain specific future times, while the term
"prediction" is used
for more general estimates, such as the number of times floods will occur
over a long
period. Risk and uncertainty are central to forecasting and prediction.
Forecasting is
used in the practice of Customer Demand Planning in every day business
forecasting for
manufacturing companies. The discipline of demand planning, also
sometimes referred to as supply chain forecasting, embraces both statistical
forecasting and a consensus process. Management use Qualitative methods
based on Judgement , Opinion , past
experience, or guesses to make forecasts. A number of Quantitative
forecasting methods
are also available to aid management.
Forecast plan.
Honda's projected vehicle production between 2012 and 2017. Honda's vehicle
production is forecast to increase from about 3.8 million units in 2012 to about five
million units by 2017. The company's compound annual growth rate (CAGR) is
estimated to stand at 5.8 percent between 2012 and 2017. Honda is a brand of the
Honda Motor Company, a multinational corporation with headquarters in Minato,
Tokyo, Japan.
Honda company invest large amount of earning on forecasting for future
years. Long term forecasting consist on five years and short term forecasting
consist on one year or less than one year.

Forecasting techniques.
Honda company use following techniques for forecasting
Qualitative vs. quantitative methods.
1.2 Average approach.
1.3 Nave approach.
1.4 Drift method.
1.5 Seasonal nave approach.
1.6 Time series methods.
1.7 Causal / econometric forecasting methods.
1.8 Judgmental methods.
Nave approach.
Estimating technique in which the last period's actuals are used as this period's
forecast, without adjusting them or attempting to establish causal factors. It is
used only for comparison with the forecasts generated by the better
(sophisticated) techniques.
Judgmental method.
There are many cases where judgmental forecasting is the only option, such as
when there is a complete lack of historical data, or when a new product is being
launched, or when a new competitor enters the market, or during completely new
and unique market conditions.
These are some techniques those are used by Honda company.
Importance of forecasting.
The importance of forecasting cant be ignored in estimating the financial
requirements of a concern. Efficient utilisation of capital is a delicate issue before
the management. No business can survive without adequate capital. But adequacy
of either fixed or working capital depends entirely on sound financial forecasting.
Forecasting of earnings ensures smooth and continuous working of a company,
particularly to newly established ones. By forecasting,company can estimate their
expected profits or losses. The object of a forecast is to reduce in black and white
the details of working of a concern.