So, you want to find out how forecasting is done. This is a good place to start.
In this guide you will see there are four general categories of forecasting models. These are the categories that forecasters use, and all forecasts fall into these categories or a combination of the categories.
The four categories are: (1) Judgmental, (2) Technological Forecasting, (3) Time Series, and (4) Causal. Specific forecasting techniques that are presented for each category.
Each category of forecasting models is described in a similar manner throughout this guide:
OVERVIEW OF THE CATEGORY
Specific techniques of the category
Also, each technique within a category is discussed in the following order:
BASIC IDEA : A simple explanation of the forecasting approach. This is where you will find the details of what, if any, are the major assumptions of the approach.
PROCEDURE: Outline of specific steps involved in implementing the technique.
EXAMPLE: If possible, an example is presented of how the technique is used, or might be used, in practice.
COMMENTS: Here, I highlight the limitations and further underlying assumptions of the technique. You should be aware of these when using the technique so that you can properly interpret the results. This will also help to enhance the "credibility" of your forecast.
REFERENCES: This guide is meant to give you a brief introduction to forecasting. You can get more information on any technique by consulting several references, two of which are listed below. Note that the first book is quite comprehensive and detailed while the second is much simpler.
Makridakis, S., S. C. Wheelwright, and V. E. McGee, Forecasting: Methods and Applications, John Wiley and Sons (1997).
Kress, G and John Snyder. Forecasting and Market Analysis Techniques, Greenwood Publishing Group (1994)
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