Accurate Statistical Forecast Inaccurate Forecasts might be even more dangerous than absence of a forecasts at all. The issue with this approach is that it promotes models that may look great on current data, instead of making accurate predictions on future data. That is why, GMDH Streamline uses special algorithms to create models that thoroughly analyse the data and generates the statistical models on the existing periods and provide more accurate forecasting predictions.
The reason why the father wished to close down the branch was that it appeared to be making a loss. However, it is quite the reverse; if the branch was closed then, the positive contribution from the branch would be lost and overall profits would fall.
This is because the indirect costs of production do not vary with output and, therefore, closure of a section of the firm would not lead to immediate savings. This may mean that closing the branch would be a mistake on financial grounds.
This mistake is made due to a misunderstanding of nature of cost behavior. If the branch is closed then the only costs that would be saved are the costs directly related to the running of the branch: The costs are indirect in nature, in this example the marketing and central administration costs, would still have to be paid as they are unaffected by output.
For this decision to be made, we should use contribution as a guide for deciding whether or not to close a branch. This can also be applied to the production of certain product lines, or the cost effectiveness of departments. On financial grounds, contribution is therefore, a better guide in making decisions.The Planning Survey 18 is based on findings from the world’s largest and most comprehensive survey of planning software users, conducted from November to February ERP Software For Today’s Manufacturers We Know Manufacturing.
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