One characteristic of FORECASTSIM is that forecasts and decisions can be implemented gradually. One type of forecasts and/or decisions can be added in each round allowing students to observe the impact of their forecasts in isolation and to identify their errors. Students learn from their mistakes and improve their forecasting and decision making in the following rounds.

Another characteristic of FORECASTSIM is that students get feedback on the accuracy of their forecasts within the context of a business. In addition to a report with their forecast errors, they receive financial statements that reflect the impact of their forecasts and decisions on profits. Points are assigned after each round of the simulation depending on the accuracy of their forecasts and on the profitability of their firm as measured by return on equity (ROE). The weights assigned to forecast accuracy and profitability can be changed.

The tentative schedule shown below does not include requiring students to forecast their income statement, balance sheet and statement of cash flows. They only forecast sales volumes and prices and decide on prices and production orders.

Historical data comprising twenty quarters worth of data is available in an Excel file at the beginning of the simulation. The information on this file is update after every round.


Round One – Students forecast sales at the market and form levels for three of the six products. The market (market level) is comprised of all teams/firms participating in the simulation.

Since teams are not authorized to make changes in price and promotional expenditures, sales volumes for these products continue to be impacted by the same variables and values that have impacted their historical values. Firm forecasts are simply the application of their market share.Production is automatic. 

Production is automatically adjusted to meet sales. There is no need to hold inventory. This means that whatever sales volumes are assigned to a firm, the firm is able to sell those volumes.

Forecast errors are reported for each of the forecasts made. Reports include financial statements.

Round Two – Same as in Round One, but student now forecast sales for all six products. The three additional products may show seasonality.

Round Three – Same as Round Two, but students now decide on production levels. Production is no longer automatic. Since some products have high storage cost, students need to be conservative with their product orders.

Round Four – Same as Round Three.

Round Five – Students decide on pricing. Promotional expenditures are kept constant allowing the students to concentrate on pricing. To guide them in their forecasting and decision making some information on elasticities at the market and firm levels is provided.

Round Six – In addition to pricing student decide on promotional expenditures. Some information on elasticities at the market and firm levels is provided.

Round Sevens to Round Twelve – No new decisions.Throughout all the rounds the simulation system provides funds as needed.