A Better Way to Forecast

Abstract

Every business decision depends on making a forecast of the consequences of the decision. Although most organizations do forecasting most do so badly. They ask either for a point prediction—a single “best guess” forecast when everyone knows that this is an oversimplification of the truth, or for a simple range forecast which is likely to result in biased predictions more often than not In this article, the authors propose a better approach, one that takes seriously the uncertainty in forecasting and the most common errors in the way people think about this uncertainty.