A wide variety of statistical forecasting techniques are available, ranging from very simple to very sophisticated. All of them try to capture the statistical distribution that we have just discussed.
Forecast Pro offers the forecasting methodologies that have been proven to be the most appropriate for business forecasting—simple moving averages, discrete data models (Poisson or negative binomial), curve fitting, Croston’s intermittent demand model, exponential smoothing, Box-Jenkins, Bass diffusion model, forecasting by analogy, dynamic regression, event models and multiple-level forecasting. The latest version of Forecast Pro also includes extreme gradient boosting, a machine learning methodology that has recently emerged as very effective for demand forecasting.
All these methodologies forecast the future by fitting quantitative models to statistical patterns from the past. Therefore, you must have historic records of your variables, preferably for several years. Forecast accuracy depends upon the degree to which statistical data patterns exist and their stability over time. The more regular the series, the more accurate the forecasts are.
Six of the methodologies are univariate techniques. They forecast the future entirely from statistical patterns in the past.
Forecast Pro’s expert selection automatically chooses the appropriate univariate forecasting technique for each item forecasted. By default, expert selection will determine which of these six univariate models is most appropriate for the data, optimize the model and create the forecasts. If desired, you may exclude machine learning in expert selection. Alternatively, you can dictate that a specific method be used and customize your models. Forecast Pro provides extensive diagnostics and statistical tests to help you make informed decisions.
Forecast Pro includes six additional forecasting techniques that are not considered in expert selection—event models, custom component models, forecast by analogy, the Bass diffusion model, dynamic regression and custom machine learning models.
If you are new to forecasting and these techniques seem a little intimidating, don’t worry. We designed Forecast Pro to guide you completely through the forecasting process. Just follow the program’s advice and you will soon be generating accurate forecasts and adding value to your business.