forecast errors for sophisticated models
What implications do forecast errors have for the search for
ultrasophisticated statistical forecasting model?
All forecasts contain some error whether the model is simple
or sophisticated, because forecasts are predictions of the future based on past
data. Forecast errors can be caused by changes in conditions that generated the
past data, for example. an economic recession could change the demand for
certain unnecessary products. The fact that all forecast models have some
error, why would we search for more accurate forecast models. No matter what a
forecaster does, they can not predict all events in the future that can cause
demand to fluctuate.
ScholarMatic: Explanation & Answer
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