Situational Factors Affecting Forecast Accuracy

Forecasts generated by five popular extrapolations are compared with each other and with a random-walk model over nearly 1500 situations. Relative to the random walk, forecasting with extrapolations is most successful on nondurable goods and series that historically have exhibited stable patterns. The amount of data available for forecasting and the product class/product form typology are not found to be important factors in the selection of an extrapolation model.