Tuesday, February 12, 2008

Categories of Forecasting Methods

The following article lists some simple, informative tips that will help you have a better experience with Categories of Forecasting Methods.

If you find yourself confused by what you've read to this point, don't despair. Everything should be crystal clear by the time you finish.

There are several categories of Forecasting Methods. These methods are very useful for forecasting. Forecasting refers to the act of estimation of any kind of future situation of which the forecaster is not aware at present. The forecasting has a close nearly similar meaning that it shares with the tern Prediction. But when you judge between the two terms you can find that prediction is a more general term with a wider meaning including cross sectional and longitudinal data as well as the estimation of time series. The forecasting is a scientific method which gives a nearly accurate result as well.

The Forecasting Methods are now included in demand planning for the day to day estimation of the business forecasting. The manufacturing companies use this forecasting to plan their production and supply. The demand planning is also referred to as the supply chain forecasting for this reason. However, there are several methods that are applied by different persons for a forecasting. These methods can be categorized under several categories depending on scientific methods.

The categories of Forecasting Methods include one important method named the time series methods. The time series methods is the data of the past to determine what will be the future outcome of the situation. In other words in the time series method the historical data is closely followed. The chages in the data are observed and depending on the calculations and estimations of the changes the future change or future situation. The time series is often considered as a series of data points. These data points are spread over a period of time. The points are places away from each other with the help of regular or irregular intervals which can be uniform or otherwise. Some of the well known methods of the time series methods are:

* Moving average method
* Exponential smoothing
* extrapolation
* Linear prediction
* Trend estimation
* Growth curve

with these methods it is possible to predict about the future situation with the help of Time series of forecasting.

Another important method in the categories of Forecasting Methods is the casual of econometric method. His method include a few Forecasting Methods which use a huge number of possible assumptions. These assumptions are put in use to determine the factors which are underlying in the assumptions. These factors though underlying have the power to influence the variables which are being foretasted. For example the sale of woolen garments have a direct relation with the weather of the place. if such underlying factors can be detected understood in every case the forecasting will be a lot more easy. Some of the important types of Casual or Econometric method are:

* Regression analysis that uses regression of linear on non linear type
* Autoregressive moving average
* Autoregressive integrated moving average
* Econometrics

the categories of Forecasting Methods also include the Judgmental method which includes various methods like intuitive judgments, opinions as well as estimates of probability. The well known judgmental methods of forecasting includes:

* Composite forecasts
* Surveys
* Delphi method
* Scenario Building
* Technology forecasting
* forecasting with the help of Analogy

Simulation, prediction market, probabilistic forecasting as well as Ensemble forecasting is the other categories of Forecasting Methods.

Take time to consider the points presented above. What you learn may help you overcome your hesitation to take action.