Industrial Engineering / Forecasting or estimation

Forecasting: It is a science of predicting event. It consists of set of statistical data and technique. The data must be up to date in order for the forecast to be as accurate as possible. 

Time Horizon in forecasting

·                     Short term forecasting:                    for 1 – 3 months

·                     Intermediate term forecasting:         for 3 – 12 months

·                     Long term forecasting:                     for more than 12 months

Type of forecasting

1. Qualitative forecasting: It is based on the opinion and judgment of consumers and experts. They are usually applied to intermediate or long term decisions. It is based on judgment, opinion, past experience, guesses etc. 
2. Quantitative forecasting: This model is used to forecast future data as a function of past data. These methods are usually applied to short or intermediate term decisions. It is appropriate when past data are available.

Forecasting method

• Time series method: This method uses previous data to forecast. 
•  Judgmental method: This method based on human judgments and opinions. 
• Casual forecasting method: In this method we establish a relation between cause and effect.

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