Forecasting
with Kesten Green and Scott Armstrong
In: Gass, S. I. and Fu, M. (in press): Encyclopedia of Operations Research and Management Science, 3rd Edition, Springer.
Introduction. The field of forecasting is concerned with making statements about matters that are currently unknown. The terms “forecast,” “prediction,” “projection,” and “prognosis” are interchangeable as commonly used. Forecasting is also concerned with the effective presentation and use of forecasts.
The field of forecasting is concerned with making statements about matters that are currently unknown. The terms “forecast,” “prediction,” “projection,” and “prognosis” are interchangeable as commonly used. Forecasting is also concerned with the effective presentation and use of forecasts.
Useful knowledge comes from empirical comparisons of alternatives and this entry is concerned primarily with evidence-based or scientific procedures. Scientific knowledge about forecasting has been summarized as a set of principles that are available at the Forecasting Principles Internet site (ForPrin.com).
Before forecasting, one should consider whether it is necessary. Forecasting is needed only if there is uncertainty; a forecast that the tide will turn is of no value. Forecasts are also unnecessary when one can control events. For example, predicting the temperature in your home does not require forecasting because you can control it. Nevertheless, many situations are uncertain, and proper forecasting procedures can help to reduce and assess uncertainty and thereby help managers to make better decisions.
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