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Forecasting

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

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Forecasting

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  1. Forecasting 5 June 2001

  2. Introduction • What: Forecasting Techniques • Where: Determine Trends • Why: Make better decisions

  3. What is Forecasting? • The art and science of predicting future events

  4. Time Horizon • Short Range – 3 – 12 months • Medium Range – 3 months – 3 years • Long Range – 3+ years

  5. Qualitative Methods • Jury of Executive Opinion • Sales Force Composite • Delphi • Consumer Marketing Survey

  6. Quantitative Methods • Time Series • Associative

  7. Time Series Methods • Trend • Seasonality • Cycle • Random Variations

  8. Naïve Approach

  9. Demand in Previous n Periods MA  n Moving Average Approach

  10. Weighted Moving Average Σ(Weight for period n) (Demand in period n) WMA = ΣWeights

  11. Exponential Smoothing • Ft= Ft-1 + (At-1 - Ft-1)

  12. MAD

  13. MSE

  14. Exponential Smoothing With Trend Adjustment Ft = (At) + (1- )Ft-1 + Tt-1 Tt = (Ft - Ft-1) + (1- )Tt-1

  15. Equation: Slope: Y-Intercept: Linear Trend Projection

  16. Seasonal Variations

  17. Equation: Y-Intercept: Regression Analysis Slope:

  18. Standard Error of Estimate

  19. Correlation Coefficient

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