primary functions: the generation and control; the generation involves gathering all of
the necessary data to build outcomes, while the control involves taking the steps to
monitor the effectiveness of the forecast model as time goes, to ensure that the
necessary changes are made to improve the model. (Stroud, n.d.).
Challenges with Business Forecasting
In order for businesses to maintain fiscal responsibility they would need to follow
a budget, unfortunately this might hinder the effectiveness of a business forecast by
limiting companies to make immediate changes due to lack of funds. (Bogiages, 2015)
Also, many businesses tend to constantly change which can sometimes make it difficult
for companies to come up with probable outcomes when predicting future operations.
Therefore, it should be understood that no business forecast is going to be completely
reliable so it is critical for managers to have the ability to recognize these forecasting
errors and handle them in a timely manner.
Causal Models, Time-Series Method and Trend Projections
Casual models are used when a model needs to include variables that are
influenced by other variables, while the time-Series method focuses on predicting future
values that are based on a single known variable in the historical data. The time-series
method takes measurements over a series of consecutive periods of time; these
measurements can be consecutive hours, days, months, or in the case of this paper,
quarters periods. Trend, cynical, seasonal, and random components are the different
possibilities that time-series forecasting method can have.