The importance of statistics lies in the extent to which it serves
as the basis for making reliable forecasts, against arbitrary forecast with no
Forecasting is a scientific process which aims at reducing the
uncertainty of the future state of business and trade, not dependent merely on
guess work, but with a sound scientific footing for the decision on the future
course of action.
Forecasting refers to the analysis of past and present conditions
with a view of arriving at rough estimates about the future conditions.
According to T.S. Lewis and R.A. Fox “Forecasting is using the
knowledge we have at one time to estimate what will happen at some future
moment of time”.
Forecasting is an important tool that serves many fields including
business and industry, government, economics, environmental sciences, medicine,
social science, politics and finance. Forecasting problems are often classified
as short-term, medium-term, and long-term.
Short-term forecasting problems involve predicting events for a
few time periods (days, weeks, months) into the future.
Medium-term forecast extends from one to two years into the
Long-term forecasting problems can extend beyond that by many
Short and medium-term forecasts are required for activities that
range from operations management to budgeting and selecting new research and
development projects. Long term forecasts impact issues relating to strategic