Statistical Forecasting in Business Term Paper Example | Topics and Well Written Essays - 1000 words

Statistical Forecasting in Business - Term Paper Example On the other hand, regression analysis in business forecasting answers the question â€Å"by how much†. In this regard, both simple and multiple regression analysis shows the relationship between the dependent variable against the independent variables (IV: within subject factors e.g. products differentiation, product prices etc.). A business normally comes up with a model based on its operations and then using the available historical data formulates a regression equation which can be used able to predict the future values. An example of a regression model is shown below;SV = ÃŽ ²0 + ÃŽ ²1P + ÃŽ ²2M+†¦+ ÃŽ ²nXi In this model, ÃŽ ²Ã¢â‚¬â„¢s are the coefficients of the various independent variables and which signifies the amount of dependent variable change (in this case sales volumes), either positive or negative, once one of the independent variable’s changes by a single unit. P, product differentiation, and M, market share, are examples of independent variables. ÃŽ ²n shows that the variables can be as many as possible depending on the business itself. According to Jain, C. L. (2000), business forecasting is normally completed through the application of data mining processes where models are used to predict future using existing/historical data from which business potential if projected based on different business activities as well as transactions. To Jain, the sole purpose of data mining is to establish the presence of predictive criteria which might be present if large volumes of historical data are used.