Mat 540 Quantative Methods - Forecasting Methods

Forecasting Methods

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Genius Forecasting Trend Extrapolation Simulation Methods Consensus Methods Cross- impact Matrix Methods Scenario

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Combination of intuition, insight, and luck Psychics and Crystal Ball readers are the most extreme cases. Many examples of success with this forecasting method This method allows for a great deal of success and a great deal of errors too.

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Weakness

It is impossible to see a good forecast until the forecast has already passed. Not recognized by science because it is to difficult to accept Any forecast could be predicted wrong.

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The trends and cycles in historical data with the use of mathematical techniques to extrapolate the future. The forces are responsible for creating the past, and the forces will continue with the future. Valid for short term forecasting Stability of the environment is a key factor

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Weaknesses

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The mathematical model is the only criteria for producing a forecast. The choice of the parameters determined the forecast. The judgmental forecasting is superior to mathematical models. There are many computer programs that generated forecasts that are more feasible.

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The use of analogs to model complex systems. An equation to predict an economic measure would be a mathematical analog. Mathematical analogs are important for future research.

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Weaknesses

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Multiple factors are involved which could effect the outcome. The strong correlations between predictor variables creates unstable forecasts.

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Forecasting complex systems involves seeking expert opinions from more than one person. One method would be to place all experts in a room and let them decide. Delphi method is a better method- Face-to-face confrontation of the group. It also produces a rapid narrowing of opinions.

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Weakness

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Everyone thinks they are an expert....