Beruflich Dokumente
Kultur Dokumente
McGraw-Hill/Irwin
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
You should be able to:
1. List the elements of a good forecast
2. Outline the steps in the forecasting process
3. Describe at least three qualitative forecasting techniques and
the advantages and disadvantages of each
4. Compare and contrast qualitative and quantitative
approaches to forecasting
5. Describe averaging techniques, trend and seasonal
techniques, and regression analysis, and solve typical
problems
6. Explain three measures of forecast accuracy
7. Compare two ways of evaluating and controlling forecasts
8. Assess the major factors and trade-offs to consider when
choosing a forecasting technique
Seasonality
Short-term, fairly regular variations related to the calendar or time
of day
Restaurants, service call centers, and theaters all experience
seasonal demand
Cycle
Wavelike variations lasting more than one year
These are often related to a variety of economic, political, or even
agricultural conditions
Random Variation
Residual variation that remains after all other behaviors have been
accounted for
Irregular variation
Due to unusual circumstances that do not reflect typical behavior
Labor strike
Weather event
Instructor Slides 3-15
Naïve Forecast
Uses a single previous value of a time series as the basis
for a forecast
The forecast for a time period is equal to the
previous time period’s value
Can be used with
a stable time series
seasonal variations
trend
Ft = At-1
F: forecast A: Actual t: time period
Week Sales (actual) Sales (forecast) Error
t A F A-F
1 20 -
2 25 20 5
3 15 25 -10
4 30 15 15
5 27 30 -3
Simple to use
Virtually no cost
Quick and easy to prepare
Data analysis is nonexistent
Easily understandable
Cannot provide high accuracy
Can be a standard for accuracy
These Techniques work best when a series tends to
vary about an average
Averaging techniques smooth variations in the data
They can handle step changes or gradual changes in the
level of a series
Techniques
1. Moving average
2. Weighted moving average
3. Exponential smoothing
A t i
Ft MA n i 1
n
where
Ft Forecast for time period t
MA n n period moving average
At 1 Actual value in period t 1
n Number of periods in the moving average
Instructor Slides 3-22
As new data become available, the forecast is updated
by adding the newest value and dropping the oldest
and then re-computing the average
The number of data points included in the average
determines the model’s sensitivity
Fewer data points used-- more responsive
More data points used-- less responsive
t A F = MA3 A-F
20
1 -
2 25 -
3 15 -
4 30 20 10
5 27 23.3333 3.66667
6 24
Figure 3-4 Revised Forecast Forecast
Actual (MA3) (MA5)
47
45
43
41
39
37
35
1 2 3 4 5 6 7 8 9 10 11 12
Questions:
• Why is MA3 longer than MA5?
• Which curve fluctuate the most?
• Which curve is the smoothest?
3-25
Responsiveness vs. Stability
• Smaller m, responsiveness , stability
• Larger m, responsiveness , stability
• Must maintain stability when fluctuations are high.
Figure 3-4 Revised Forecast Forecast
Actual (MA3) (MA5)
47
45
43
41
39
37
35
1 2 3 4 5 6 7 8 9 10 11 12
3-26
The most recent values in a time series are given more
weight in computing a forecast
The choice of weights, w, is somewhat arbitrary and
involves some trial and error
Ft wt ( At ) wt 1 ( At 1 ) ... wt n ( At n )
where
wt weight for period t , wt 1 weight for period t 1, etc.
At the actual value for period t , At 1 the actual value for period t 1, etc.
45
40
35
1 2 3 4 5 6 7 8 9 10 11 12
Period
Focus Forecasting
Some companies use forecasts based on a “best current
performance” basis
Apply several forecasting methods to the last several periods
of historical data
The method with the highest accuracy is used to make the
forecast for the following period
This process is repeated each month
Diffusion Models
Historical data on which to base a forecast are not
available for new products
Predictions are based on rates of product adoption and usage
spread from other established products
Take into account facts such as
Market potential
Attention from mass media
Word-of-mouth
Linear trend equation
Non-linear trends
Ft a bt
where
Ft Forecast for period t
a Value of Ft at t 0
b Slope of the line
t Specified number of time periods from t 0
Ft = a + bt
0 1 2 3 4 5
Ft = Forecast for period t t
t = Specified number of time periods
a = Value of Ft at t = 0
b = Slope of the line
180
160
140
120
100 Actual
80 Trend
60
Underlying
Demand
a 40
20
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
b (slope)
Easy to use: a built-in
function in spreadsheet
software Yt Deviation
Based on Least Squares
method used in linear
regression, which
Minimizes the sum of the
squares of the deviations
Uses equal weight for all time At
periods
Both a and b must be
recalculated on regular basis
to include new data.
Slope and intercept can be estimated from historical
data
n ty t y
b
n t t
2
2
a
y b t
or y bt
n
where
n Number of periods
y Value of the time series
Instructor Slides 3-40
Period (t) Sales (Yt) t*Yt t^2
Exercise: Calculate b and a by using
1 67 67 1
2 74 148 4 the sums on the left.
3 102 305 9
4 87 346 16 n tYt t Yt
5 106 530 25 b
n t 2 t
6 86 516 36 2
7 117 817 49
8 113 904 64 105958 55996
5.79
10385 55
9 130 1168 81 2
10 116 1156 100
55 996 5958 385
a
Yt b t
n
t Yt tYt t
2
996 5.7955
67.78
10
t y
2
Week t Sales ty
1 1 150 150
2 4 157 314
3 9 162 486
4 16 166 664
5 25 177 885
812 - 6.3(15)
a = = 143.5
5
y = 143.5 + 6.3t
Seasonality – regularly repeating movements in series
values that can be tied to recurring events
Expressed in terms of the amount that actual values deviate
from the average value of a series
Models of seasonality
Additive
Seasonality is expressed as a quantity that gets added to or
subtracted from the time-series average in order to incorporate
seasonality
Multiplicative
Seasonality is expressed as a percentage of the average (or trend)
amount which is then used to multiply the value of a series in order
to incorporate seasonality
Sa
t
M
on
W
ed
s
Fr
i
Volume
Su
Volume
n
Tu
es
Th
ur
s
Sa
t
M
on
Deseasonalize
90.00
80.00
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
s
s
es
es
on
on
t
t
s
i
Sa
Sa
Fr
ur
ur
Su
ed
Tu
Tu
M
M
Th
Th
W
Deseasonalize
Seasonal relatives
The seasonal percentage used in the multiplicative seasonally
adjusted forecasting model
Using seasonal relatives
To deseasonalize data
Done in order to get a clearer picture of the nonseasonal (e.g.,
trend) components of the data series
Divide each data point by its seasonal relative
To incorporate seasonality in a forecast
1. Obtain trend estimates for desired periods using a trend
equation
2. Add seasonality by multiplying these trend estimates by the
corresponding seasonal relative
a
y b x
or y b x
n
where
n Number of paired observatio ns
Instructor Slides 3-52
Standard error of estimate
A measure of the scatter of points around a regression
line
If the standard error is relatively small, the predictions
using the linear equation will tend to be more accurate
than if the standard error is larger
y y
2
Se c
n2
where
S e standard error of estimate
y y value of each data point
n number of data points
Instructor Slides 3-53
Correlation, r
A measure of the strength and direction of relationship between
two variables
Ranges between -1.00 and +1.00
Actual Forecast t
2
MSE weights errors according
MSE t
to their squared values
n 1
Actual t Forecast t
Actual t
100
MAPE weights errors
MAPE according to relative error
n
Instructor Slides 3-57
Actual Forecast (A-F)
Period
(A) (F) Error |Error| Error2 [|Error|/Actual]x100
Sum 13 39 11.23%