1 Flashcards
What is a difference between Forecast vs Prediction
Forecast is scientific and free from intuition and personal
bias, whereas prediction is subjective and fatalistic in nature. Forecasting is an extrapolation of past into the future while prediction is judgmental and takes into
account changes taking place in the future.
What is the difference between forecast vs estimate
Forecast is always followed by a future form, but estimate
can be followed by any tense.
What are different lengthts of Forecasting Horizon
Short-term forecasts are needed for scheduling of personnel, production and transportation. As part of the scheduling process, forecasts of demand are often also required.
Medium-term forecasts are needed to determine future resource requirements in order to purchase raw materials, hire personnel, or buy machinery and equipment.
Long-term forecasts are used in strategic planning. Such decisions must take account of market opportunities, environmental factors and internal resources.
What is the difference between quantitative and qualitative methods
Quantitative - data driven methods
Qualitative - based on opinion, interviews and etc.
Qualitative Forecasting Methods
Jury of executive opinion. This method takes the opinions of a small group of high-level managers, often in combination with statistical models, and results in a group estimate of demand.
Sales force composite. In this approach, each salesperson estimates what sales will be in his or her region; these forecasts are reviewed to ensure that they are realistic and are then combined at the district and national levels to reach an overall forecast.
Consumer market survey. This method solicits input from customers or potential customers regarding their future purchasing plans. It can help not only in preparing a forecast but also in improving product design and
planning for new products.
What is Delphi method and who are participants?
Delphi method is iterative group process allows experts, who may be located in different places, to mak forecasts.
There are three different types of participants in the Delphi process: decision makers, staff personnel, and respondents.
What is the difference between Time series models and Causal models?
Time-series models attempt to predict the future by using historical data.
Causal models incorporate the variables or factors that might influence the quantity being forecasted into the forecasting model.
Main Methods Used for Economic Forecasting
Explanatory methods (regression, distributed lags)
Time-series models (Naive forecasting, ARIMA, ARCH)
Data mining and Machine learning methods
Forecasting steps
1.Problem definition
2. Gathering information
3. Preliminary (exploratory) analysis
4. Choosing and fitting models
5. Validating forecasting model
6. Making a forecasting, implementing results
