Overview of time series forecasting

Today’s energy and retail to transportation and finance industries rely on forecasting product demand, resource allocation, financial performance, predictive integrity, and time-series forecasting for myriad other applications. Despite the potential for time-series forecasting to transform business models and improve revenue, many companies have not yet adopted the technology to benefit. Let’s start with the definition and get an overview of the application and methods.

Time series forecasting is a method for predicting future events by analyzing past trends, based on the assumption that future trends are similar to past trends. Forecasting involves predicting future values ​​using a model that fits historical data. Forecasting problems that include time components require time series forecasting. This provides a data-driven approach to effective and efficient planning.

Time series prediction application

Time-series models have a wide range of uses, from sales forecasts to weather forecasts. Time series models have proven to be one of the most effective forecasting methods for decisions that include factors of uncertainty about the future.

Time series forecasting informs all kinds of business decisions. Some examples:

  • Forecasting electricity demand to decide whether to build another power plant in the next 5 years
  • Forecasting volume to schedule call center staff next week
  • Forecast inventory requirements to inventory to meet demand
  • Supply and demand forecasts to optimize fleet management and other aspects of the supply chain
  • Predict equipment failures and maintenance requirements to minimize downtime and maintain safety standards
  • Prediction of infection rates to optimize disease management and outbreak programs
  • Forecast customer evaluation up to product sales forecast

Forecasts may include different time periods, depending on the situation and what you are forecasting.

How to create a time series forecast

Time series forecasts are created based on Time series analysisConsists of a method of analyzing time series data to extract meaningful statistics and other characteristics of the data. The goal of time series forecasting is to predict future value or classification at a particular point in time.

Copyright © 2021 IDG Communications, Inc.

Overview of time series forecasting

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