Statistics for Business

10

Forecasting and Estimating From Correlated Data

Value of imported goods into the United States

Forecasting customer demand is a key activity in business. Forecasts trigger strategic and operations planning. Forecasts are used to determine capital budgets, cash flow, hiring or termination of personnel, warehouse space, raw material quantities, inventory levels, transportation volumes, outsourcing requirements, and the like. If we make an optimistic forecast – estimating more than actual, we may be left with excess inventory, unused storage space, or unwanted personnel. If we are pessimistic in our forecast – estimating less than actual, we may have stockouts, irritated or lost customers, or insufficient storage space. In either case there ...