Forecasting techniques help organizations to plan for the future. Some are based on subjective criteria and often amount to title more than wild guesses or wishful thinking. Others are based on measurable, historical quantitative data and are therefore given more credence by business decision makers, analysts and potential investors. While no forecasting technique in entirety can predict the future with complete certainty, they remain essential in estimating an organisation’s prospect.
Qualitative forecasting methods are subjective, based on the opinion and judgement of consumers, experts and more appropriate when past data is not available. It is usually applied to intermediate long range decisions. Examples of qualitative forecasting methods are informed opinion and judgement, delphi technique etc.
Quantitative forecasting methods on the other hand are used to estimate future demand as a function of past data, and therefore appropriate when historical data are available. The method is usually applied to short-intermediate range decisions. Popular quantitative methods of forecasting include time series analysis, extrapolations, econometric analysis, regression analysis, etc.