Operations Forecasting

Operations Forecasting

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OPS 571

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It is very important for a business to be able to draw conclusions about the future of their business. This helps them to estimate the growth of their business and see the success of their operations through things like revenue, sales, and company assets. The company can then choose certain aspects to evaluate and try to forecast future data for. Once this data is evaluated it can help the business determine what aspects of the business operations should be improved. This can help a company see what they can expect from the current business operations.

For the company of Wal-Mart, I have forecasted the data for the company’s net sales, total revenue, and total assets. Each of these forecasts can help the business understand what the future may hold for the business and reflects on the success of their operations. For example, the forecast for the net sales can help the business predict if their sales are going to grow, stay the same, or decrease as a result of their current operations. A total revenue forecast can also help a business understand more about their sales as a result of their business operations. This is because of the fact that revenue represents the amount of money that a company receives during a specified time period including any discounts from sales or deductions for any merchandise that is returned (“Investopedia”, 2016). Therefore, if this represents income after sales and returns then it could show that the business operations for creating quality products is very successful.

A total assets forecast can help a business predict the future success of their business by seeing if their amount of assets increases or decreases. A decrease would mean that stores could be closing and the company is losing its value. This could be very useful but for the sake of this particular business the forecast for total revenue would be the best due to its ability to account for any deductions from returns. This would be more beneficial than the net sales forecast since the net sales does not include any deductions for products that are returned. Therefore, it would give the company a better idea of the success of their operations and high quality products for customers.

This forecast could have a great impact on the business in several different ways. The first way that it could impact the business is by allowing them to see if the business is predicted to expect a growth or decline in revenue. A growth could signal that the business has a very successful business operation and a decline in revenue shows that the business operations are failing to meet standards. Another indicator for the success of the business operations could be if there is no decline or growth in the total revenue forecast. This could be an early indicator that the business needs to make improvements to their business operations before any more declines in the amount of revenue occur.

I feel that this type of forecast could be very beneficial because of the fact that it can notify the business of any early issues with their operations. It will also help them to see if there has been an increase or decrease in returns of products. If they begin to notice an increase in the amount of products that are being returned this can help them narrow down their problem to product quality control. In turn this will allow the business to determine how to improve their operations by saving money and increasing revenue. If the company finds a way to improve the business operations so that creating products becomes less expensive but still maintains quality they will see a great financial growth for the company.

As it can be seen, there are many different things that can be useful forecasts for businesses to evaluate the success of their business operations. Things like the net sales, total revenue, and total assets can be used for forecasts to get a good representation of the success of the business operations as well as pin point what aspects of the operation may need to be improved. Since the operations of the business directly affect the relationship between customers and the business it is important to make sure that these operations are ensuring high quality service and products for their consumers.

References

Investopedia. (2016). Retrieved from http://www.investopedia.com/terms/r/revenue.asp

Wal-Mart. (2016). Retrieved from http://stock.walmart.com/investors/financial-information/annual-reports-and-proxies/default.aspx