The dictionary meaning of the word forecasting is to estimate what could possibly be the future outcomes within a business or operation. But when it comes to the sector of data analysis this method is used for translating the past data or experiences into future possible outcomes. This is a highly useful analytics tool that helps any company management to cope with uncertainty of the future. For both short term and long term decisions forecasts are highly important.
Forecasting can be used by businesses in several areas, which may include: economic forecasts, technological forecasts, and also demand forecasts. Forecasting techniques can be classified into 2 broad techniques: quantitative analysis (objective approach) and qualitative analysis (subjective approach). For the quantitative method of forecasting technique an analysis of historical data is conducted and the past patterns in data are assumed to predict future data points. While on the other hand in the qualitative forecasting technique, the judgment of experts is employed in the specific field to generate probable forecasts. These are mostly educated guesses or opinions of experts in that specific area of expertise. Continue reading “Understanding Time Series Method of Forecasting”