Production Control IIND2201 – section 1

Seasonal Demand Summary

Demand behavior:

 Demand oscillates around a straight line with or without a trend.

 The series has a seasonality with N periods in each season.

Model:

Where,

Methodology:
 Analyze the data for the demand from D1 a DT
 Initialization step:
o Calculate S0, G0 (you already know how!)
o the N seasonal factors using: 𝑚 −1 𝐷𝑡+(𝑖∗𝑁)
𝑖=0 𝑦𝑡+(𝑖∗𝑁)
𝐶𝑡−𝑁 =
𝑚

 Check that ∑cj=N, if not, normalize them as:

cj(normalize) = [cj /∑ cj] × N

 Calculate St, Gt and ct with the triple exponential smoothing equations for t= 1 to T.
 Calculate Ft. For future forecast use the equation of Ft,t+𝜏
 FORECASTS SUMMARY

AMOUNT OF HISTROICAL COMPLEXITY

METHOD DATA PATERN FORECAST HORIZON PREPARATION TIME
DATA

SIMPLE EXPONENTIAL LOW

STATIONARY 10-15 Observations SHORT SHORT
SMOOTHING

WITH TREND
EXPONENTIAL 15-20 SHORT OR LIGHT
AND WITHOUT SHORT
SMOOTHING (HOLT) Observations MEDIUM
SEASONALITY

At least 4
WITH TREND
EXPONENTIAL observations for SHORT OR MODERATE
AND SHORT
SMOOTHING WINTERS seasonal cycle MEDIUM
SEASONALITY
2 seasonal cycles

SHORT,
COMPLEX SHORT TO HIGH
REGRESSION 20 Observations MEDIUM
RELATIONS MODERATE
OR LARGE

At least 4
WITH TREND
observations for SHORT OR SHORT TO MODERATE
DESCOMPOSITION AND
seasonal cycle MEDIUM MODERATE
SEASONALITY
2 seasonal cycles

STATIONARY O
SHORT,
TRANSFORMED 50 or more CONSIDERABLE
BOX & JENKINS MEDIUM LARGE
TO observations
OR LARGE
STATIONARIES

AUTOREGRESSIVE SHORT,
50 or more CONSIDERABLE
ARIMA COMPLEX MEDIUM LARGE
observations
PATTERNS OR LARGE