What kinds of problems can we solve with forecasting?
Forecasting is the science of predicting the future values of a time series as accurately as possible, given all the available information (including historical values of the very time series of interest, other related time series, and knowledge of any events that can impact your forecast). After reading the previous chapter, you might understand why it can also be considered an art!
Forecasting is a regular task required by many activities: most of the time, a forecast is a means to an end and not an actual objective in itself—except for financial planning, as mentioned in the introduction, although you could argue that financial planning is also a means to ensure good business decision-making. Here are a few examples of situations where you can leverage forecasting to achieve better business outcomes:
- Forecasting future demand for a product to decide how much a plant will have to manufacture and by when. Failing...