Forecasting

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					Forecasting

         5 June 2001
Introduction
   What: Forecasting Techniques
   Where: Determine Trends
   Why: Make better decisions
What is Forecasting?
   The art and science of predicting future
    events
Time Horizon
   Short Range – 3 – 12 months
   Medium Range – 3 months – 3 years
   Long Range – 3+ years
Qualitative Methods
   Jury of Executive Opinion
   Sales Force Composite
   Delphi
   Consumer Marketing Survey
Quantitative Methods
   Time Series
   Associative
Time Series Methods
   Trend
   Seasonality
   Cycle
   Random Variations
Naïve Approach
Moving Average Approach



MA   Demand in Previous n Periods
                   n
Weighted Moving Average


        Σ(Weight for period n) (Demand in period n)
WMA =
                         ΣWeights
Exponential Smoothing
   Ft = Ft-1 + (At-1 - Ft-1)
MAD


         forecast errors
MAD 
                n
MSE
Exponential Smoothing With
Trend Adjustment
Ft = (At) + (1- )Ft-1 + Tt-1


Tt = (Ft - Ft-1) + (1- )Tt-1
Linear Trend Projection
  Equation:      ˆ
                 Yi  a  bx i


                        n
                        x i y i  nx y
  Slope:           b  i 
                          n
                              
                           x i  nx 
                        i 




  Y-Intercept:      a  y  bx
Seasonal Variations
Regression Analysis

   Equation:      ˆ
                  Yi  a  bx i
                         n
                         x i y i  nx y
   Slope:           b  i 
                           n
                               
                            x i  nx 
                         i 



   Y-Intercept:      a  y  bx
Standard Error of Estimate

               n
                  yi  yi 
                         ˆ
     S y,x  i 
                    n

                 n        n        n
                  yi  a  yi  b  x i yi
              i       i      i 
                            n
Correlation Coefficient

				
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posted:8/31/2012
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