>Extrapolation is the analysing of data based on past trends.
*It is a simple method of forecasting
*Not much data is required
*It is quick and cheap
Bonus ？ It can motivate staff if levels are high. Which means they are doing a great job.
*It can be unreliable if there have been no changes in fluctuations with past data
*It assumes that past trends will continue into the future, which is unlikely in many business environments.
*It ignores qualitative factors (e.g. changes in taste, fashion etc.)
Bonus ？ It can stress staff out if levels are too high or too low. It may mean more stress from work to maintain these levels or to increase them from low state.
Related Q&A：
What are the advantages and disadvantages of extrapolation forecasting？Well, let me tell you about the pros and cons of extrapolation forecasting. One advantage is that it's relatively simple and quick to do. It can give you a rough idea of what might happen based on past data. But, oh boy, there are some drawbacks too. It assumes that the future will follow the same pattern as the past, which might not always be true. And if there are sudden changes or unforeseen factors, extrapolation can lead to really inaccurate predictions. Also, it doesn't take into account new trends or innovations that could completely change the situation. So, while it can be useful in some cases, you've got to be careful when relying on it.
