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Data scientists are often called on to predict future events.
        There are four main types of forecasting methods that financial analysts are likely to use.
           • Perform financial forecasting

           • Reporting, and operational metrics tracking
           • Analyse financial data
           • Create financial models use to predict future revenues

        3.1.2 Four common types of Forecasting Models
        Businesses use forecasting models predict outcomes related to sales, supply and demand, consumer behaviour, etc. This
        is possible through forecasting models. These models are used in the fields of sales and marketing. There are several
        forecasting methods that businesses use that provide a wide range of information. The appeal of forecasting models,
        whether simple or complex, stems from having a visual representation of expected outcomes.
        Companies use these methods to improve their business practices and enhance the customer experience. Let us now
        learn about the four main types of models or methods that companies use to predict actions:
           • Time series model: This type  of model uses historical  data  for  reliable forecasting.  Knowing  how  the  variables
          interact in terms of hours, weeks, months or years helps to better visualise patterns of data.
           • Econometric model: People from an economic background usually use an econometric model to predict changes in
          supply and demand, as well as prices. Throughout the process of creation, these models assimilate complex data and
          knowledge. This statistical model proves valuable, when forecasting economic future developments.
           • Judgemental forecasting model: This model uses subjective and intuitive information to make forecasts. In times
          when there is no data accessible for reference, a judgemental forecasting model is used. Launching a new product or
          facing uncertain market conditions also creates situations in which this model proves advantageous.
           • The Delphi method: This method is often used to predict trends based on the information given by a think tank. This
          series of steps is based on the Delphi method, which is about the Oracle of Delphi. It assumes that the answers given
          by a group are more helpful and unbiased than those provided by a single person. Based on the objective or aim of
          the group's researchers, the total number of rounds involved may vary.




             Predicting future sales by using historical sales data and other information to make informed business decisions about
             everything from inventory planning to running flash sales, making estimations about future customer demand is known as
             demand forecasting. It also helps predict total sales and revenue.


        3.1.3 advantages of Forecasting

        Nearly all companies engage in forecasting. Forecasting provides companies an edge over their competitors. Let us
        now learn about the advantages of forecasting in detail.

           • Gaining valuable insight: Looking at past and real-time data is a pre-requisite to predict future demand through
          forecasting.  This  will  ,  in  turn,  help  anticipate  demand  fluctuations  more  effectively.  Also,  it  will  give  you  an
          understanding of your company’s health and provide you with an opportunity to make necessary amendments.
           • Learning from past mistakes: You do not go back to square one after each forecast. Even if your prediction was
          completely off the mark, you now know where to begin.You can easily analyse why things didn’t happen the way you
          predicted. This will help you improve your predicting techniques. You can also reflect on your past achievements, as
          introspection can be a powerful driver of company growth.
           • Decreasing the life cycle costs: If demand forecasting is done the right way, it will help you modify your processes
          to multiply your efficiency all along the supply chain. Anticipating what and when customers will demand aids in
          reducing excess inventory and increasing gross profitability.


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