Question

The two most important factors in choosing a forecasting technique are:

1) Accuracy and buy-in
2) Cost and time horizon
3) Accuracy and time horizon
4) Cost and accuracy
5) Cost and ease of use.

Answer 1

The most important factors in choosing a forecasting technique are accuracy and time horizon, as they directly affect the quality of decisions and must align with the decision's time frame.

Step-by-step explanation:

When choosing a forecasting technique, the two most important factors are accuracy and time horizon.

An explanation for why these factors are so critical is that a forecasting model's accuracy directly impacts decision quality. For example, in agriculture, inaccurate weather predictions can significantly affect crop yields. The time horizon is equally important because the relevance of the forecast depends on its period. A short-term forecast may not be helpful when making long-term strategic decisions. However, for operational planning, a shorter time horizon might be necessary.

Cost, buy-in from stakeholders, ease of use, and other factors are certainly important but secondary to the fundamental requirements of obtaining reliable forecasts that match the time frame of the decision-making process.