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.
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.