Forecasting Basics

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Questions and Answers

What is a forecast?

A statement about the current value of a variable of interest
A statement about the future value of a variable of interest (correct)
A statement about the past value of a variable of interest
A statement about the hypothetical value of a variable of interest

What are two important aspects of forecasts?

Trend analysis and seasonal variation
Expected level of supply and accuracy
Accuracy and precision
Expected level of demand and accuracy (correct)

What is a common feature of all forecasts?

Techniques assume some underlying causal system that existed in the past will persist into the future (correct)
Forecasts for individual items are more accurate than those for groups of items
Forecasts are always perfect
Forecast accuracy increases as the forecasting horizon increases

What does forecast accuracy decrease as?

<p>The forecasting horizon increases (C)</p> Signup and view all the answers

Why are forecasts not perfect?

<p>Because random variation is always present, there will always be some residual error, even if all other factors have been accounted for. (C)</p> Signup and view all the answers

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