Forecasting, Planning, and Goals
Forecasting is a common statistical task in business where it helps inform decisions about scheduling of production, transportation and personnel, and provides a guide to long-term strategic planning. However, business forecasting is often done poorly and is frequently confused with planning and goals. They are three different things.
Forecasting is about predicting the future as accurately as possible, given all the information available including historical data and knowledge of any future events that might impact the forecasts.
Goals are what you would like to happen. Goals should be linked to forecasts and plans, but this does not always occur. Too often, goals are set without any plan for how to achieve them, and no forecasts for whether they are realistic.
Planning is a response to forecasts and goals. Planning involves determining the appropriate actions that are required to make your forecasts match your goals.
Forecasting should be an integral...
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References and Further Reading
Brown RG (1959) Statistical forecasting for inventory control. McGraw-Hill, New York
Byron RP, Ashenfelter O (1995) Predicting the quality of an unborn Grange. Econ Rec 71(212):40–53
Chatfield C, Koehler AB, Ord JK, Snyder RD (2001) A new look at models for exponential smoothing. J Roy Stat Soc, Ser D: Statistician 50(2):147–159
Hanssens DM, Parsons LJ, Schultz RL (2001) Market response models: econometric and time series analysis, 2nd edn. Kluwer Academic, Boston, MA
Holt CC (1957) Forecasting trends and seasonals by exponentially weighted averages, O.N.R. Memorandum 52/1957, Carnegie Institute of Technology
Hyndman RJ, Fan S (2010) Density forecasting for long-term peak electricity demand, IEEE Transactions on Power Systems, 25(2):1142–1153
Hyndman RJ, Koehler AB, Ord JK, Snyder RD (2008) Forecasting with exponential smoothing: the state space approach. Springer, Berlin
Makridakis S, Wheelwright SC, Hyndman RJ (1998) Forecasting: methods and applications, 3rd edn. Wiley, New York
Pardoe I (2006) Applied regression modeling: a business approach, Wiley, Hoboken, NJ
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Hyndman, R.J. (2011). Business Forecasting Methods. In: Lovric, M. (eds) International Encyclopedia of Statistical Science. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-04898-2_156
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