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Why are forecasts not always correct?

Updated: 9/20/2023
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Wiki User

11y ago

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Creating a forecast requires us to make assumptions or guesses about events that have not yet occurred, and if those future actual events don't match our assumptions about them, the forecast can be incorrect.

For example, assume that it's the end of May, and I want to forecast my sales revenue for June. In doing so, I may decide to assume that I will sell as many beach umbrellas June as I did in May (say, 500 umbrellas). But if June turns out to be very rainy, and very few customers buy beach umbrellas that month, my forecast for June will have been incorrect.

A forecast can be as simple as the example above, or it may be the result of many calculations and complex assumptions.

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11y ago
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