14.5. Steps in the Forecasting Process
There are six basic steps in the forecasting process. They are:
Determine the what and why of the forecast and what will be needed. This will indicate the level of detail required in the forecast (e.g., forecast by region, by product), the amount of resources (e.g., computer hardware and software, manpower) that can be justified, and the level of accuracy desired.
Establish a time horizon, short term or long term. More specifically, project for the next year or next five years.
Select a forecasting technique. Refer to the criteria discussed before.
Gather the data and develop a forecast.
Identify any assumptions that had to be made in preparing the forecast and using it.
Monitor the forecast to see if it is performing in a manner desired. Develop an evaluation system for this purpose. If not, go back to Step 1.
Get Budgeting Basics and Beyond now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
