Successful organizations are also those who are able to make relatively accurate forecasts about the future needs (inventory, facilities, capacity, manufacturing, manpower) for the products produced or the services delivered.

Forecasting is an uncertain science since it calls for predictions but current theoretical and mathematical models (quantitative and qualitative) make it possible for organizations to predict with an acceptable margin of error. Think about it this way; without forecasting organizations would always be responding rather than acting.

  1. Select one industry from the list below: Bank, restaurant, health clinic/hospital, airline, or university.
  2. What specific variables would be needed by that organization in order to forecast? Be sure you explain why you selected each variable and why it is important to forecasting
  3. Which variables are used for short-range forecasting, long-range forecasting, or for both. Make sure you support your selections.



Everything in life nowadays needs planning particularly business organization. Forecasting is one of the planning tools that provide an insight and prediction of the future of the organization especially the financial status of the organization. The primary purpose of forecasting is to eliminate or reduce effects of uncertainty in all aspects and levels of business.  For prediction to be useful, an organization needs to use both the past and present data to project the future outcome (Box, 2015). This paper seeks to discuss the variables that are necessary to forecast processes in the hotel industry.

Question 1

The hospitality industry goes beyond the hotel as it includes lodgings, event planning, and theme parks. Below are some of the key variables that should be included in the forecasting process of a restaurant.

  1. Sales – sales in a hotel forms the essential part of all business operations. As a matter of fact, the hotel needs to know how much sales it makes per day to come up with both food and beverage cost.
  2. The number of customers – in most cases, the hotel industry is highly affected by the seasons of the year. During the peak periods, there are large numbers of customers but during the low peak periods, there are few guests. The number of customers helps the hotel to plan on how to purchase their foodstuffs(Box, 2015).

Question 2

However, variables can also be divided into short term and long terms depending on their effects on the daily operations of the business.

  1. Sales can be grouped as a long-term variable considering that sales of food, beverages, and beds are the main source of income and revenue for hotels. Without sales or with reduced sales, the hotel cannot operate efficiently because the cost may exceed revenue.
  2. The number of customers can be grouped as a short-term variable since it only affects the hotel for a few days especially if the hotels uses the reorder time as a week or a month. Mostly, the re-order level is influenced by lead time(Box, 2015)


Box, G. E. (2015). time series analysis: forecasting and control. John Wiley & Sons.

Related: Forecasting Demand

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