The Role of Forecasting

Forecasting is a natural part of human behaviour and experience whether we explicitly realise it or not. For all of us are continually implementing plans as we go about our daily living and these plans must necessarily be founded upon views about the future i.e. upon forecasts. These forecasts may, of course, be very imprecise and it may be argued that to dignify such an imprecise and unstructured process as ‘forecasting’ is to misuse the term. Then again we may rely for our main forecasts on views of experts such as weathermen, modifying them to suit our own particular needs. What is true for the individual is also true for the firm in its approach to forecasting. It may be very imprecise and unstructured and a good deal of reliance may be placed on the views of experts such as economic forecasters. However, the purpose of this article is to argue that forecasting may be conducted in a systematic manner, despite all the pitfalls to be enumerated, and to explain the growth of the forecasting activity in industry and its role.