1. what is forecasting?

Forecasting is the process of predicting or estimating future events, trends or outcomes based
on historical data and other relevant information. It is a critical aspect of many fields,
including finance, economics, business, and science, where the ability to make informed
decisions about the future is essential. The goal of forecasting is to provide insights into what
may happen in the future, enabling individuals and organizations to make more accurate
plans, reduce uncertainty, and make better decisions. Forecasting techniques may involve
statistical models, machine learning algorithms, time series analysis, or other methods to
identify patterns and trends in historical data that can be used to predict future outcomes.
However, it's important to keep in mind that forecasts are not always precise or accurate, and
there is always some level of uncertainty associated with them.
2. why we need to do forecasting ?
Forecasting is essential because it allows individuals and organizations to make informed
decisions about the future based on current and historical data. Here are some reasons why we
need forecasting:
Planning: Forecasting helps individuals and organizations to plan for the future by
anticipating trends and outcomes. This can include forecasting demand for products or
services, future sales revenue, or identifying potential risks and opportunities.
Resource allocation: Forecasting enables organizations to allocate resources effectively
by predicting future demand for resources, such as labor, raw materials, or inventory.
Budgeting: Forecasting helps organizations to create accurate budgets by predicting
future revenue and expenses. This enables them to allocate funds effectively and make
informed financial decisions.
Risk management: Forecasting allows organizations to identify potential risks and
develop strategies to mitigate or avoid them. This can include predicting changes in the
market, identifying potential supply chain disruptions, or anticipating changes in customer
behavior.
Performance evaluation: Forecasting enables organizations to evaluate their performance
by comparing actual results with predicted outcomes. This can help them identify areas for
improvement and make informed decisions about future investments and initiatives.
Overall, forecasting is a critical tool for individuals and organizations across a wide range of
industries and fields, helping them to make more informed decisions, reduce uncertainty, and
achieve their goals more effectively.
3. how to do forecasting ?
Forecasting is the process of making predictions about future events based on historical
data and trends. Here are some general steps for doing forecasting:
Define the problem: Clearly define what you want to forecast, such as sales, revenue, or
customer demand.
Gather data: Collect relevant data about the problem you want to forecast. The data
should be representative of the past and present trends in the problem.
Clean and preprocess data: Ensure that the data is accurate, complete, and consistent.
Remove any outliers, errors, or missing values. Also, transform the data to make it suitable for
modeling.
Choose a forecasting model: There are various statistical and machine learning models
 available for forecasting. Choose a model that is appropriate for your problem and data.
Train the model: Use the historical data to train the forecasting model. The model should
learn the patterns and relationships in the data.
Validate the model: Use a separate set of data (validation set) to evaluate the performance
of the model. The validation set should be representative of the data used for training the
model.
Make forecasts: Once the model is validated, use it to make forecasts on new data.
Monitor the accuracy of the forecasts and adjust the model if necessary.
Communicate results: Communicate the forecasting results to stakeholders, including
any uncertainties or assumptions made in the forecasting process.
Remember that forecasting is not an exact science, and there is always uncertainty and risk
involved. Therefore, it is essential to use multiple models, assumptions, and scenarios to
ensure that the forecasting results are robust and reliable.
4. examples:
XAirport Passenger Forecasting

5. activity
1). In forecasting techniques, what are the common qualitative models?
①Delphi Methods
②Jury of Executive Opinion
③Sales Force Composite
④Consumer Market Survery
Delphi method: This is a consensus-based approach that involves collecting opinions and
feedback from a panel of experts through a series of questionnaires or rounds of discussion.
The responses are then aggregated and analyzed to arrive at a consensus forecast.
Scenario analysis: This involves developing different scenarios or possible future
outcomes based on different assumptions about the key drivers of change in the market or
environment.
Expert opinion: This is a simple approach that involves seeking the opinions of experts
or individuals with specialized knowledge in the relevant field to make predictions about the
future.
Market research: This involves gathering information about consumer preferences,
trends, and behaviors through surveys, focus groups, and other research methods to make
predictions about future demand.
Historical analogy: This involves looking at historical trends and events that are similar
to the current situation and using them to make predictions about the future.
Grassroots forecasting: This involves soliciting predictions from a wide range of individuals,
such as customers, employees, and suppliers, to get a broad perspective on future trends and
developments.
2). In forecasting techniques, what are the common quanitative models?
Time series analysis: This involves analyzing past data to identify patterns in the data and
then using these patterns to make predictions about future trends.
Exponential smoothing: This is a time series forecasting technique that uses a weighted
average of past observations to predict future values. The weights decrease exponentially as
the observations get older.
Regression analysis: This involves using a regression equation to model the relationship
between a dependent variable and one or more independent variables. This model can be used
to make predictions about the dependent variable based on the values of the independent
variables.
Box-Jenkins (ARIMA) models: These are time series models that use autoregressive
(AR), integrated (I), and moving average (MA) components to model the underlying patterns
and trends in the data.
Neural networks: These are models that use a series of interconnected nodes or "neurons"
to analyze complex data and identify patterns and trends. They are particularly useful for
forecasting in situations where there are multiple inputs and complex relationships between
the inputs and the outputs.
Decision trees: These are models that use a tree-like structure to analyze data and make
predictions. They are particularly useful for forecasting in situations where there are multiple
decision points and outcomes.
3).Knowing the sales data of a certain company from 2017 to 2022, use the linear regression
method to predict the sales volume of the company in 2023.
Year Year(X) Sales(Y)
2017 1 11000
2018 2 12200
2019 3 12500
2020 4 15800
2021 5 15520
2022 6 16980
2023 7 ?????
2024 8 ?????
2025 9 ?????