Using new housing construction data as a predictor of construction equipment sales is an example of what type of forecasting method?
Using new housing construction data as a predictor of construction equipment sales is an example of what type of forecasting method?
Using new housing construction data to predict construction equipment sales is an example of a causal forecasting method. Causal forecasting, also known as associative forecasting, involves identifying a cause-and-effect relationship between two variables. In this case, the level of new housing construction (independent variable) is used to predict the sales of construction equipment (dependent variable). This method uses external factors to forecast future demand, different from time series methods which rely solely on past data trends, judgement methods based on intuition, or market surveys that gather direct feedback from the market.
A. Casual
Correct. Causal is another term for associative forecasting
The answer should be A. A market survey is gathering information from the market. -> direct demand Causal forecasting is deriving demand from different variables. In this example, it is the insights gained from the data.
Answer is A: Casual - The causal forecasting method involves using cause-and-effect relationships to predict future outcomes. In this case, using new housing construction data as a predictor for construction equipment sales implies that changes in housing construction activity may directly impact equipment sales. By analyzing historical patterns and understanding how these variables influence each other, companies can make informed predictions about equipment demand. (The difference between methods) Market survey (a tool) involves gathering data directly from potential customers, industry experts, or market research to predict future demand. By surveying target audiences, companies can assess preferences, intentions, and trends, which inform sales forecasts. It’s a valuable approach for understanding customer needs and market dynamics.
D: since it is a new housing so there is no historical data so need a market survey
Causal forecasting methods involve identifying and using key factors or variables that are believed to influence the variable being forecasted
I think it is D, Market survey they are studying new home sales construction data which is kind of market survey