What is Forecasting Models

Definition

Forecasting models predict future values based on historical data, applying statistical or machine-learning techniques to estimate quantities such as demand, sales, or resource needs, helping organisations plan and make decisions under uncertainty.

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Predict future demand, sales, or resource needs from history
Support planning and decisions under uncertainty
Quantify expected outcomes to guide budgeting and capacity
Improve over time as more data and feedback accumulate

Real World Example

A retailer's forecasting models predict product demand by store for the coming weeks, so it stocks the right inventory, reducing both stockouts and overstock based on data-driven projections.

FAQs

What do forecasting models predict?

Future values of a quantity, such as demand, sales, traffic, or resource usage, from historical and related data.

What techniques power forecasting?

Classical time-series methods, regression, and machine-learning models, chosen based on data and accuracy needs.

How is forecast accuracy evaluated?

By comparing predictions against actual outcomes using error metrics like MAE, RMSE, or MAPE.