Question

Which of the following is not a step in the forecasting process? (Points: 10)
A) Determine the use of the forecast.
B) Eliminate any assumptions.
C) Determine the time horizon.
D) Select forecasting model.
E) Validate and implement the results.

Answer 1

The general steps in the forecasting process are as follows:
1) Identify the general need
2) Select the Period (Time Horizon) of Forecast
3) Select Forecast Model to be used: For this, knowledge of various forecasting models, in which situations these are applicable, how reliable each one of them is; what type of data is required. On these considerations; one or more models can be selected.
4) Data Collection: With reference to various indicators identified-collect data from various appropriate sources-data which is compatible with the model(s) selected in step(3). Data should also go back that much in past, which meets the requirements of the model.
5) Prepare forecast: Apply the model using the data collected and calculate the value of the forecast.
6) Evaluate: The forecast obtained through any of the model should not be used, as it is, blindly. It should be evaluated in terms of ‘confidence interval’ – usually all good forecast models have methods of calculating upper value and the lower value within which the given forecast is expected to remain within the lints.

So, answer is B