ForecastSim is a business simulation used to enhance business and financial forecasting skills.
Students are required to make forecasting decisions for six products with different demand and cost
characteristics. Two products show seasonality.
Forecasts include forecasting market and firm
sales volumes, and market prices. On the financial side, forecasting short-term funding, net income,
and total assets and liabilities. Decisions include setting prices and promotional expenditures, and
ordering production. The number of forecasts and decisions required in each round can be controlled.
For example, for a forecasting class, no financial forecasts are included.
This simulation, in addition to giving participants the opportunity to
The simulation
starts with all companies in the same condition. Students are first require to make forecasts and no
decisions. As the simulation progresses, students are allowed to set prices and promotional
expenditures. With each product sold in different markets, the competition that ensues in the
products that have a high price elasticity, makes sales and financial forecasting more challenging.
This condition forces students to go beyond using forecasting techniques and to use judgment and
conjecture, while keeping an eye on the financial condition of their company.
Performance
reports are comprised of financial statements and corresponding footnotes. The report also details
errors in forecasting sales at the market and firm levels as well as forecasting errors in
projecting cash flows, income statement and balance sheet. Points to teams are assigned based on
forecasting errors and firm profitability.
This simulation is recommended for Sales
Forecasting and Business Forecasting courses.
Students can be grouped in teams of two to five
members. They can also work independently. Up to sixteen groups can participate. The simulation can
last up to twelve weeks with each week simulating three months of operations. Before the beginning
of each simulation, the economic environment and the degree of competition in which the companies
will conduct their operations can be modeled. The potential profitability and risk of the company
can also be modeled.
A manual and weekly instructions for students are provided on this
website before each round of decisions. After each round, reports and financial statements in Excel
format are made available to students and the instructor. Another report includes a summary of
performance variables and a ranking of the teams.
Decisions are implemented in a progressive
manner. The number and complexity of the decisions increases as the simulation progresses. A
tentative forecasting and decision schedule is provided below.
Depending on the preference of
the instructor and the nature of the course, an Excel template can be made available to aid the
students in forecasting financial statements. Students can also receive technical support from ASD
Business Simulations. This simulation is entirely administered through the Web. There
is no need for professors to get involved in the operation of the simulation since students
receive instructions before each round and short feedbacks after round reports are made
available.
