What is forecasting?

Dictionary : An activity to calculate or predict some future event or condition, usually as a result
of rational study or analysis of pertinent data.
Objective of forecasting: reduce the forecast error
Forecasting is analytical and not predictive
Classification of forecasting methods
Forecasting methods

Qualitative quantitative techniques.
Qualitative or subjective forecast: Based on mathematical or statistical models
Intuitive, largely educated guesses Have underlying model or technique
May or may not depend on past data Results produced automatically from the model
Usually cannot be reproduced by someone Fully reproducible by any forecaster
Not a rigorous approach Probablistic and deterministic models
May be quite appropriate in certain
situations


Forecasting Methods:

Qualitative
Time Series
o Simple Moving Average
o Weighted Moving Average
o Exponential Smoothing
o Adjusting for trends - Double Exponential Smoothing
o Multiplicative Seasonal Method
Causal Methods
Focus Forecasting
Forecasting horizons:
long-term: more than 2 years
medium-term: 3 months to 2 years
short-term: 0 to 3 months