Why might a business choose to use the Naïve Method for forecasting?

The choice of using the Naïve Method for forecasting is rooted in its simplicity and efficiency, which often makes it a cost-effective option for businesses. The Naïve Method typically involves using the most recent data point as the forecast for the next period, making it very easy to implement. This straightforward approach does not require extensive computations or complex statistical analyses, allowing businesses to quickly generate forecasts without dedicating significant resources to the forecasting process.

Additionally, this method is particularly useful in situations where resources or timelines are constrained, and accuracy can still be maintained, especially in stable environments where historical data is indicative of future trends. Despite its lack of sophistication, the Naïve Method can provide reasonable estimates and serve as a benchmark against which more complex models can be evaluated.