How to choose the right forecasting method?

Choosing the correct forecasting technique depends on the type and scope of the forecast. Qualitative analysis techniques can be time-consuming and expensive but always provide accurate forecasts. On the other hand, quantitative methods are more beneficial in terms of quicker analysis and containing larger scope. As a result, forecasters often perform a sort of cost-benefit analysis in order to determine which method optimises the chances of an accurate forecast in the most efficient manner. Furthermore, combining techniques can improve the reliability of forecasts by taking advantage of their synergistic effects.

Limitations of forecasting

The greatest limitation of forecasting analysis is its quality itself, that is, predicting the future which is fundamentally unknown today. Hence it totally works on best guesses. Though we can improve the reliability of the forecasts by various methods, the data which has to be inputted into the model needs to be corrected. Not doing so, will result in a garbage-in, garbage-out type of analysis.

Conclusion

Forecasting analysis helps researchers, analysts, investors, and managers make well-thought decisions for future events. Many researchers and businesses can’t grow without good forecasts. Using qualitative and quantitative forecasting analysis methods, users can get better insights into what lies ahead in time. In any case, since we cannot definitively predict the future, and since forecasts are often based on historical data, their accuracy will always come with some margin for error and may even be incorrect in some cases. Get expert assistance if needed. Good luck!