STEPS IN THE FORECASTING PROCESS There are six basic steps in the forecasting process: 1. Determine the purpose of the forecast. How will it be used and when will it be needed? This step will provide an indication of the level of detail required in the fore- cast, the amount of resources (personnel, computer time, dollars) that can be justified, and the level of accuracy necessary. 2. Establish a time horizon. The forecast must indicate a time interval, keeping in mind that accuracy decreases as the time horizon increases. 3. Obtain, clean, and analyze appropriate data. Obtaining the data can involve significant effort. Once obtained, the data may need to be cleaned to get rid of outliers and obviously incorrect data before analysis. 4. Select a forecasting technique. 5. Make the forecast. 6. Monitor the forecast errors. The forecast errors should be monitored to determine if the forecast is performing in a satisfactory manner. If it is not, reexamine the method, assumptions, validity of data, and so on; modify as needed; and prepare a revised forecast