Forecasting using exponential smoothing method

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					• "Those who have knowledge, don't
  predict. Those who predict, don't
  have knowledge. "
• --Lao Tzu, 6th Century BC Chinese
  philosopher
Forecasting using exponential
     smoothing method
• Part 1. Theory
• Part 2. Using Excel: demonstration.
  Forecasting a number of library visitors
• Assignment 1, 2
         Learning objectives

• To learn how to use moving exponential
  smoothing method in forecasting
       Main idea of the method
• Main idea of the method: smoothing down
  variations in the data. Forecast error for the
  previous period is taken into account.
Prerequisite data pattern
     Horizontal (irregular variations)
     Evaluation of the method
• Advantages: rather simple method; More
  recent data are considered as being more
  influential.
• Shortcomings: Not applicable when trend
  exists; No definite rule of choosing its
  parameters
  Switch to Excel

   Open the Workbook
Exponential_smoothing.xls
   Using Data Analysis ToolPak in
               Excel

• Tools  Data Analysis  Exponential
  smoothing
• Note: if you dont find Data Analysis, it may
  be not installed: Tools  Add Ins; Analysis
  ToolPak should be checked.
    Part 2. Working with Excel
• Forecasting a number of visitors of a small
  library. Demonstration of the forecasting
  procedure using exponential smoothing method
• Assignment 1. Repeating of the forecasting
  procedure with the same data
• Assignment 2. Repeating of the forecasting
  procedure with the same data but different
  parameter (damping factor).