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What assumptions are common to all forecasting models? For each assumption, explain how the usefulness of forecasts would be affected if the assumption was not true. Using an example of a specific business decision based upon a forecast, explain how and why it might make a difference to the decision-making process if the level of confidence in the forecast is a) very high, b) moderate, c) very low

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What assumptions are common to all forecasting models?

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"Forecasting techniques generally assume that the same underlying causal relationship that existed in the past will continue to prevail in the future. In other words, most of the forecasting techniques are based on historical data."

Reference: http://accounting-financial-tax.com/2009/04/qualitative-forecasting-methods-and-techniques/

For example, in trend analysis, we make forecasts based on assumptions that conditions/causal relationship that existed in the past will hold true in future as well. However, such relationship may not hold true in the future and thus, forecasts can go wrong.

For example, let's say that sales forecast is being made regarding seasonal sales volume based on historical climatic conditions. However, such climatic conditions may not hold true in the future, say, summer can be longer than ...

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