Point forecasts and interval forecasts are two different approaches to predicting future outcomes, each serving distinct purposes and offering varying levels of information. A point forecast provides a single estimated value for the variable of interest at a specific future time. For instance, if you're predicting the website traffic for next month, a point forecast might suggest that you expect 15,000 visits in total. This number represents your best guess but provides no insight into the potential variability or uncertainty around that estimate.
In contrast, interval forecasts offer a range of values within which the actual outcome is expected to fall, reflecting uncertainty about the prediction. For example, instead of just stating that 15,000 visits are anticipated, an interval forecast might suggest that you expect between 12,000 and 18,000 visits. This range acknowledges the inherent uncertainties in prediction and provides a more comprehensive picture. By articulating the range, stakeholders can better understand the risks associated with planning or decision-making based on the forecast.
Both types of forecasts have their own advantages and can be used effectively depending on the context. Developers may prefer point forecasts for simplicity when they need a straightforward target for project timelines or resource allocation. However, interval forecasts can be more useful in scenarios where there's high uncertainty or variability, such as predicting user demand for a new feature. Understanding the differences between these forecasting methods allows developers and technical professionals to select the approach that best fits their needs and improves their planning accuracy.