Accuracy of Forecast:

Greater the accuracy of forecast lower is the related error. The forecast error, which means the difference between actual demand and forecast demand, is always translated into costs. A negative error, meaning actual demand is less than forecast demand, results in idle capacity or surplus inventory that cost money (tied up capital). A positive error, meaning real demand is more than forecast demand, causes shortages, forgone profits, and loss of good will.

Forecast is after all a forecast but an attempt must be made to have enough accuracy in the forecasts such that the combined cost of surpluses and shortages of inventory and capacity is at the minimum.

Objectivity

Whenever this is suspected or known that current conditions represent a different environment than what is incorporated in the past data utilized for the preparation of the forecast, a correction factor is applied to the past data to make it representative of the current environment. Instead of being subjective in the application of correction factor, it is preferable to treat the data objectively first and then "correct" the resulting forecast to account for the more recent developments.