Forecasting

Abstract

Forecasting procedures are needed only if there is uncertainty about the future. Forecasts are unnecessary when one can control events. For example, predicting the temperature in your home does not require the use of forecasting procedures because you can control it. A forecast that the sun will rise tomorrow is of little value. Many decisions, however, involve uncertainty, and in these cases formal forecasting procedures (referred to simply as "forecasting" below) can be useful. By reducing certainty about changes in the environment and by better predictions of the likely effects of policy changes, managers can make better decisions. They can also obtain a more realistic assessment of the risks they face.

Keywords: forecasting, predictions, methods