How Forecasting Can Support Business Decisions
A forecast is only useful if it is connected to a decision and communicated with its uncertainty.
Analytics.sa · · 6 min read
Forecasting is one of the most practical applications of analytics. It is also one of the most frequently misused.
Connect forecasts to decisions
Every forecast should answer a question someone needs to act on: how much to order, how many people to schedule, how much budget to reserve. The horizon and granularity should follow from that decision.
Report ranges, not points
A single number hides the most important information: how confident the forecast is. Prediction intervals let planners prepare for plausible variation.
Measure and revisit
Track forecast error over time. Simple models that are monitored often outperform sophisticated models that are not.