# User Contributed Dictionary

### Noun

forecasts- Plural of forecast

# Extensive Definition

Forecasting is the process of estimation in unknown
situations. Prediction is a
similar, but more general term. Both can refer to estimation of
time
series, cross-sectional
or longitudinal
data. Usage can differ between areas of application: for example in
hydrology, the terms
"forecast" and "forecasting" are sometimes reserved for estimates
of values at certain specific future times, while the term
"prediction" is used for more general estimates, such as the number
of times floods will occur over a long period. Risk and uncertainty are central to
forecasting and prediction. Forecasting is used in the practice of
Customer
Demand Planning in every day business forecasting for
manufacturing companies. The discipline of demand planning, also
sometimes referred to as supply chain forecasting, embraces both
statistical forecasting and a consensus process.

Forecasting is commonly used in discussion of
time-series data.

## Categories of forecasting methods

### Time series methods

Time series
methods use historical data as the basis of estimating future
outcomes.

### Causal / econometric methods

Some forecasting methods use the assumption that
it is possible to identify the underlying factors that might
influence the variable that is being forecast. For example, sales
of umbrellas might be associated with weather conditions. If the
causes are understood, projections of the influencing variables can
be made and used in the forecast.

- Regression analysis using linear regression or non-linear regression
- Autoregressive moving average (ARMA)
- Autoregressive integrated moving average (ARIMA)

- e.g. Box-Jenkins

### Judgemental methods

Judgemental forecasting methods incorporate
intuitive judgements, opinions and probability estimates.

### Other methods

## Forecasting accuracy

The forecast error is the difference between the
actual value and the forecast value for the corresponding
period.

\ E_t = Y_t - F_t

where E is the forecast error at period t, Y is
the actual value at period t, and F is the forecast for period
t.

Measures of aggregate error:

Please note that the business forecasters and
demand planners in the industry refer to the PMAD as the MAPE,
although they compute this volume weighted MAPE. Difference between
MAPE and WMAPE is explained in
Calculating Demand Forecast Accuracy

See also

## Applications of forecasting

Forecasting has application in many
situations:

- Supply chain management
- Weather forecasting, Flood forecasting and Meteorology
- Transport planning and Transportation forecasting
- Economic forecasting
- Technology forecasting
- Earthquake prediction
- Land use forecasting
- Product forecasting
- Player and team performance in sports
- Telecommunications forecasting

## External links

- Forecasting Principles: "Evidence-based forecasting"
- [http://http://www.itl.nist.gov/div898/handbook/pmc/section4/pmc4.htm Introduction to Time series Analysis (Engineering Statistics Handbook)] - A practical guide to Time series analysis and forecasting
- Time Series Analysis
- Applied Forecasting: news on forecasting
- Global Forecasting with IFs

## See also

## References

- Turchin, P., 2007. Scientific Prediction in Historical Sociology. History & Mathematics: Historical Dynamics and Development of Complex Societies. Moscow: KomKniga. ISBN 5484010020

forecasts in Simple English:
Forecasting