Question

Describe the common forecasting techniques we used in excel, and discuss pros and cons of each technique? And Describe the common forecasting error evaluation techniques we used in excel, and discuss pros and cons of each technique.

Answer 1

It is important to evaluate forecast accuracy using genuine forecasts. Consequently, the size of the residuals is not a reliable indication of how large true forecast errors are likely to be. The accuracy of forecasts can only be determined by considering how well a model performs on new data that were not used when fitting the model.  

Forecasterror

A forecast “error” is the difference between an observed value and its forecast. Here “error” does not mean a mistake, it means the unpredictable part of an observation. It can be written aseT+h=yT+h−^yT+h|T,