What forecast method is based on internal factors, such as an average of past sales?

What forecast method is based on internal factors, such as an average of past sales?

• A. Qualitative forecast
• B. Intrinsic forecast method
• C. Causal forecast
• D. Market forecast

Answer: (B)

Forecasts built from internal data focus on what’s happening inside the organization rather than in the market. An intrinsic, internally driven approach uses the company’s own information, such as past sales, to project future demand. Taking an average of past sales is a classic intrinsic method—it smooths historical internal data to forecast upcoming periods. This works best when demand is relatively stable and there aren’t strong external shifts, because the forecast relies on internal history rather than outside factors. Qualitative forecasts depend on judgment and opinions from people or market research, not internal data. Causal forecasts look for external cause-and-effect relationships, linking demand to outside drivers. Market forecasts are based on external market conditions and trends.

Forecasts built from internal data focus on what’s happening inside the organization rather than in the market. An intrinsic, internally driven approach uses the company’s own information, such as past sales, to project future demand. Taking an average of past sales is a classic intrinsic method—it smooths historical internal data to forecast upcoming periods. This works best when demand is relatively stable and there aren’t strong external shifts, because the forecast relies on internal history rather than outside factors.

Qualitative forecasts depend on judgment and opinions from people or market research, not internal data. Causal forecasts look for external cause-and-effect relationships, linking demand to outside drivers. Market forecasts are based on external market conditions and trends.