Last updated August 16, 2023
The forecast horizon helps decision-makers understand the time frame for which they can rely on the forecasted information. It influences planning, resource allocation, inventory management, and strategic decision-making.
- Short-term: A forecast horizon of up to 3 months, used for tactical planning and managing immediate operations.
- Medium-term: A forecast horizon of 3 to 12 months, used for medium-range planning and adjusting strategies.
- Long-term: A forecast horizon for more than 12 months, used for strategic planning, investment decisions, and long-term business goals.
The accuracy of a forecast may vary depending on the length of the forecast horizon, with longer-term forecasts generally being less accurate than shorter-term forecasts due to the greater uncertainty and variability over longer time periods.