Question

Short-term forecast involves a period of how many months?

• A. 12 months
• B. 24 months
• C. 18 months
• D. 36 months

Hint:

Remember the general rule for forecasting horizons: Short-term is up to 1 year, Medium-term is 1 to 3 years, and Long-term is over 3 years. This is a standard classification in operations management and business planning.

Answer 1

The Correct Option is A

Step 1: Understanding the Question:
The question asks for the typical time horizon of a short-term forecast.
Step 2: Key Concept:
Forecasting is the process of making predictions about the future based on past and present data. Forecasts are typically classified by their time horizon:
- Short-term Forecast: Used for tactical decisions like production scheduling, inventory management, and workforce planning.
- Medium-term Forecast: Used for decisions like sales and production planning, and budgeting.
- Long-term Forecast: Used for strategic decisions like new product development, capacity planning, and facility location.
Step 3: Detailed Explanation:
The time periods for these classifications are not universally fixed but follow a general convention:
- Short-term forecasts typically cover a period of up to one year (12 months).
- Medium-term forecasts usually span from one to three years.
- Long-term forecasts cover periods of three years or more.
Given the options, 12 months is the most appropriate and widely accepted duration for a short-term forecast.
Step 4: Final Answer
A short-term forecast generally involves a period of up to 12 months.