Prediction Interval and Calibration

How long will a specific piece of equipment last before it fails? How many units might fail under warranty in the next year? Answering these critical business questions requires looking beyond averages and making predictions for future observations, which is precisely the role of a prediction interval.

This article provides a practical introduction to prediction intervals and clarifies their important distinction from the more common confidence interval. More than just theory, this is a hands-on tutorial that walks you through building and, crucially, calibrating a prediction interval using a real-world dataset on mechanical switch failures. Complete with step-by-step instructions and the corresponding R code, you'll learn how to create more accurate and reliable forecasts for your own data.