What is the difference between Forecasting vs Prediction?

predictive_model
regression
#1

Dear all,

Could you please help me clarifying when should one be using a forecasting and when a predictive model to be used?
Can i say that all for all the time series problems are forecasting problems and non time series problems a predictive model can be used?

Thanksa lot in advance.

#2

Karthe,

One of the key differentiation between the two is granularity of the problem. Typically forecasting is done at a higher level - For example: “How much sales can we expect in next month?” or “What are the expected call volumes in a call center?”

Your aim is to understand the overall demand / supply and plan your business accordingly. Predictive modeling, on the other hand goes far granular - you ask questions like “Who are the customers who are likely to buy a product in next month?” and then act accordingly.

Of course, you can add the outcome of predictive model to get a forecast!

Hope this helps

#3

Makes sense. thanks Kunal

#4

To add to the discussion

  • Forecast mandates you to have a time series data
  • Purpose of forecasting is to estimate a value in future where predictive modelling are used to understand relationships between variables. These relation is used to estimate current or future value