Categories of Forecasting Methods
The most reliable way to forecast the future is to try to understand the present.
—John Naisbitt
Categories of Methods
To be able to make good forecasting model selection we need to first understand the types of forecasting methods and their characteristics. This will help us understand the choices we have in forecasting and decide when to use one versus the other.
All forecasting methods can be classified into two broad categories: judgmental forecasting methods and statistical forecasting methods. These are shown in Figure 4.1. These categories are fundamentally different. Also, their use in practice is very different. There are many model choices in each category from which to choose. Before we can ...
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