The evolution of forecasting methods and of their integration in business decision-making
The distinction is often made at firm level between strategic decisions implying productive or commercial investment on a large scale and based on medium or long-term forecasts (3, 5 or 10 years), and tactical decisions relating to day-to-day management which refer to short-term forecasts (1 to 18 months). The reference data available, overall demand expressed in time series or more detailed information in cross-section, and the nature of the products, new or not new, have led to the parallel development of two separate forecasting techniques: econometric models and market segmentation models respectively. The paper gives a rapid description of the way in which these techniques have evolved over the last fifteen years and of the current trend, placing special emphasis on the advisability of integrating forecasting models with medium-term planning so as to produce veritable simulation models covering the possible growth prospects of the firm.
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