What is Forecasting

Forecasting for business is about creating a view of the future which can be used to aid planning decision making. This future view should be rigorous and explainable.

A forecast model is a construct which holds the data and assumptions about the future, allowing them to interact with each other and the forecaster.

The forecast is used to assist in planning and decision making by clarifying the likely shape of future business conditions, markets, etc., by allowing existing knowledge and assumptions to be combined in a structured way, through use of scenarios and ‘what-if’s to explore future development.

The techniques used in forecasting allow current data and assumptions to be used as the basis of future scenario development.

A forecast is only as good as the data or assumptions it is based on.

There are many practical considerations which need to be taken into consideration when building a forecast.

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