Demand Forecasting Best Practices

14 Statistical forecasting

Statistical forecasting models can be roughly divided into two types: Time series forecasting, the most common one, and predictive models. This division can be a bit artificial at times—you could use both approaches in a single model—but let’s keep it for now because it will simplify our understanding of the topic.

14.1 Time series forecasting

Time series models look at historical demand patterns (trend and seasonality) and extrapolate them into the future. To do so, they usually decompose demand into three subcomponents: level, trend, and seasonality. Most time

series forecasting models are also called univariate ...