Using the Gray Forecasting Method in Estimating Production Costs in Terms Of Strategic Decision Making

Abstract

Cost accounting is of great importance in making an effective decision. Especially developments in the technological field have necessitated a revision in cost systems. Therefore, traditional cost systems remain incapable of making future decisions and are replaced by modern cost systems which keep pace with technology and developments. Thereby, making strategic decisions is based on more rational grounds.In today's competitive environment, it has vital importance that businesses can continue their activities by making trustworthy cost estimates. There are different cost estimation methods for businesses. In this study, the "Gray Estimation Method" was used to estimate the costs that an enterprise operating in the agriculture and livestock sector will bear in the next year. For this firstly, a 1-year model was formed using 4 data in 3-month periods. Then, the accuracy of the estimation results obtained was checked and it was determined that there was approximately 6% of error margin. In conclusion, it was determined that the gray estimation method had a high reliability rate in short-term cost estimation by using less data.