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MB0044 Q2. a. List the benefits of forecasting.

Answer: NOT MANY PEOPLE have trouble calculating costs. It takes a little more ingenuity to pin down the benefits. There are three main categories of benefit:
  • Direct cost savings: savings in expenditure other than labour - print, paper, telephone, travel costs, etc. - that can be directly attributed to the introduction of the intranet. These can usually be calculated in three steps: (1) the number of incidences of expenditure in the time period, (2) the cost of each incidence and (3) the proportion of these that could be eliminated using the intranet. For example, if the number of pages of formal printed material received per person per year was 500, the cost in pence per page, including printing and delivery, was 6p and the percentage of these pages that could be delivered on-line was 70%, the saving in pounds would be 500 x (6 / 100) x 70% x the size of the population.
  • Labour savings: savings in the amount of time required to carry out tasks as a result of introducing the intranet. These can be expressed in minutes per person per day. To calculate the saving, divide the number of minutes saved by the number of minutes in the day (60 x the number of working hours) and multiply by the size of the population and the average salary.
Productivity increases: increases in output per person attributable to the introduction of the intranet, expressed as a percentage. Because personal productivity has such a wide range of implications from job to job and organisation to organisation, it is probably easier to convert these to simple labour savings. For example, if the total productivity gains were 3%, calculate the savings as (3 / 103) x the size of the population x the average salary. The actual effect of higher productivity, such as increases in sales, could well be much larger and, if you can estimate these, then you should.


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