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To determine:
Introduction:
Forecasting means an estimation of a change of a set of variables at a future date. Forecasting is generally carried out to take a decision and for the purpose of planning at a future date. Forecasting is done to arrive at a better position in near future and to avoid such ill circumstances that would have happened, if proper forecasting would have not been carried over.
Explanation of Solution
Forecasting issues that are being encountered in our daily life and the process of making those forecasts:
a. Quantitative methods:
This method is being used in absence of relevant past data. This involves long term forecasting. For example, Delphi technique involves involving a body of experts for arriving at an opinion which is a consensus one, and finding out about what the future holds. The experts are being involved here for a belief that they can able to correctly determine the future course of action as compared to non-experts. For example, if we want to know about the living style of western countries after 80 years, whom we should choose?
b. Regression methods: It is known in a linear regression the form Y=a +bX is being fitted to a group of data. Basically, it is used when there is more than one independent variable. When the basic linear regression is expanded it is called as multiple regression.
c. Multiple equation method:
If there are many variables which are dependent in nature, and that interacts with the help of a series of equations, this method is applied thereto. It is commonly used in econometrics, which is also known as economic modelling.
d. Time series method:
It is used when the nature of variable is a flexible one, that changes over time and that is not at all dependent to any other variables.
It is used in doing short-term forecasting, as the past behaviour of a variable can help to depict the future behaviour more easily.
As a conclusion it can be said that there are many forecasting techniques that are being used in day to day life. The most important thing is to select the appropriate one for appropriate place to remove any ambiguity.
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