Beruflich Dokumente
Kultur Dokumente
COB 291
Spring 2000
Forecasting
A forecast is an estimate of future demand
Forecasts contain error
Forecasts can be created by subjective means
by estimates from informal sources
OR forecasts can be determined mathematically
by using historical data
OR forecasts can be based on both subjective
and mathematical techniques.
Qualitative Approaches
Executive committee consensus
Delphi method
Survey of sales force
Survey of customers
Historical analogy
Market research
Quantitative Approaches
Based on the assumption that the “forces”
that generated the past demand will
generate the future demand (i.e., history
will tend to repeat itself)
Analysis of the past demand pattern
provides a good basis for forecasting future
demand
Quantitative Approaches
Simple Linear Regression
– Relationship between one independent variable, x,
and a dependent variable, y
– Assumed to be linear
– Form: Y=a+bX
• Y=dependent variable
• a=y-intercept
• X=independent variable
• b=slope of the regression line
Quantitative Methods - L.S.
Regression Example
Perfect Lawns, Inc., intends to use sales of
lawn fertilizer to predict lawn mower sales.
The store manager feels that there is
probably a six-week lag between fertilizer
sales and mower sales. The pertinent data
are shown below. =>
Quantitative Methods - L.S.
Regression Example
Period Fertilizer Sales Number of Mowers Sold
(Tons) (Six-Week Lag)
1 1.7 11
2 1.4 9
3 1.9 11
4 2.1 13
5 2.3 14
6 1.7 10
7 1.6 9
8 2 13
9 1.4 9
10 2.2 16
11 1.5 10
12 1.7 10
A) Use the least squares method to obtain a linear regression line for the data.
Quantitative Methods - L.S.
Regression Example
Period Fertilizer Sales Number of Mowers Sold (X) (Y) X2 Y2
(Tons) (X) (Six-Week Lag) (Y)
1 1.7 11 18.7 2.89 121
2 1.4 9 12.6 1.96 81
3 1.9 11 20.9 3.61 121
4 2.1 13 27.3 4.41 169
5 2.3 14 32.2 5.29 196
6 1.7 10 17.0 2.89 100
7 1.6 9 14.4 2.56 81
8 2 13 26.0 4.00 169
9 1.4 9 12.6 1.96 81
10 2.2 16 35.2 4.84 256
11 1.5 10 15.0 2.25 100
12 1.7 10 17.0 2.89 100
Quantitative Methods - L.S.
Regression Example
Period Fertilizer Sales Number of Mowers Sold (X) (Y) X2 Y2
(Tons) (X) (Six-Week Lag) (Y)
1 1.7 11 18.7 2.89 121
2 1.4 9 12.6 1.96 81
3 1.9 11 20.9 3.61 121
4 2.1 13 27.3 4.41 169
5 2.3 14 32.2 5.29 196
6 1.7 10 17.0 2.89 100
7 1.6 9 14.4 2.56 81
8 2 13 26.0 4.00 169
9 1.4 9 12.6 1.96 81
10 2.2 16 35.2 4.84 256
11 1.5 10 15.0 2.25 100
12 1.7 10 17.0 2.89 100
n ( X )(Y ) X Y
b
n X 2
X 2
Quantitative Methods - L.S.
Regression Example
(12)(248.9) (215
. )(135)
b
(12)(39.55) (215
.) 2
84.3
6.826
12.35
Quantitative Methods - L.S.
Regression Example
Y b X
a
n n
135 (6.826)(215
.)
0.98
12 12
Quantitative Methods - L.S.
Regression Example
Ye 0.98 6.826( X )
Predict lawn mower sales for the first week in August, given fertilier
sales six weeks earlier of two tons.
Ye 0.98 6.826( 2) 12.67 lawn mowers
Time Series Analysis
A time series is a set of numbers where the
order or sequence of the numbers is
important, e.g., historical demand
Analysis of the time series identifies
patterns
Once the patterns are identified, they can be
used to develop a forecast
Time Series Models
Simple moving average
Weighted moving average
Exponential smoothing (exponentially
weighted moving average)
– Exponential smoothing with random fluctuations
– Exponential smoothing with random and trend
– Exponential smoothing with random and seasonal
component
Time Series Models
Simple Moving Average
5 ? (110+110+80)/3 = 100.00
Time Series Models
Simple Moving Average
St Dt (1 ) St 1
Ft 1 St
Time Series Models
Exponential smoothing (exponentially weighted moving average)
Where
t=time period
St=smoothed average at end of period t
Dt=actual demand in period t
=smoothing constant (0<<1)
Ft=forecast for period t
Time Series Models
Exponential smoothing (exponentially weighted moving average)
2 error measures:
( Dt Ft )
Bias n
D F
Mean Absolute Deviation
t t
St Dt (1 )( St 1 Tt 1 )
Tt ( St St 1 ) (1 )Tt 1
Ft n St nTt
Demand Data with Trend and
Seasonality
t Dt
0
1 40
2 70
3 60
4 88
5 70
6 120
7 100
8 130
Basic Model Application
base smoothing constant, alpha,
=.20
This spreadsheet updates the ES model for Quarters 1 through 8 and makes
forecasts for Quarters 9 through 12.
alpha= 0.20
beta= 0.00
gamma= 0.00
t Dt St Tt It Ft Dt-Ft ABS
0 40.00 0.00
1 40.00 40.00 0.00 1.00 40.00 0.00 0.00
2 70.00 46.00 0.00 1.00 40.00 30.00 30.00
3 60.00 48.80 0.00 1.00 46.00 14.00 14.00
4 88.00 56.64 0.00 1.00 48.80 39.20 39.20
5 70.00 59.31 0.00 1.00 56.64 13.36 13.36
6 120.00 71.45 0.00 1.00 59.31 60.69 60.69
7 100.00 77.16 0.00 1.00 71.45 28.55 28.55
8 130.00 87.73 0.00 1.00 77.16 52.84 52.84
9 1.00 87.73
10 1.00 87.73
11 1.00 87.73
12 1.00 87.73
29.83 29.83
BIAS MAD
FORECASTING DEMO
140.00
120.00
100.00 Demand (D)
80.00 Forecast (F)
60.00 Forecast Error (D-F)
40.00 Abs. Forecast Error | D-F |
20.00
0.00
1 2 3 4 5 6 7 8
Period
Trend-Enhanced Application
base smoothing constant, alpha,
= .20 and trend smoothing
constant, beta, = .30
This spreadsheet updates the ES model for Quarters 1 through 8 and makes
forecasts for Quarters 9 through 12.
alpha= 0.20
beta= 0.30
gamma= 0.00
t Dt St Tt It Ft Dt-Ft ABS
0 40.00 10.00
1 40.00 48.00 9.40 1.00 50.00 -10.00 10.00
2 70.00 59.92 10.16 1.00 57.40 12.60 12.60
3 60.00 68.06 9.55 1.00 70.08 -10.08 10.08
4 88.00 79.69 10.17 1.00 77.61 10.39 10.39
5 70.00 85.89 8.98 1.00 89.86 -19.86 19.86
6 120.00 99.90 10.49 1.00 94.87 25.13 25.13
7 100.00 108.31 9.87 1.00 110.39 -10.39 10.39
8 130.00 120.54 10.58 1.00 118.18 11.82 11.82
9 1.00 131.12
10 1.00 141.70
11 1.00 152.27
12 1.00 162.85
1.20 13.78
BIAS MAD
FORECASTING DEMO
150.00
-50.00
1 2 3 4 5 6 7 8
Period
Seasonal Indexes
seasonal index = actual demand / average
demand
divide demand by its seasonal index to
deseasonalize and
multiply demand by its seasonal index to
seasonalize.
t Dt It Dt'
1 8 0.8 10
2 24 1.2 20
3 27 0.9 30
4 44 1.1 40
5 40 0.8 50
6 72 1.2 60
7 63 0.9 70
8 88 1.1 80
Full Model for Exponential
Smoothing
NOTE: This model will allow you to
forecast with trend only, with trend and
seasonality, with seasonality only, or with
no trend and no seasonality.
Full Model for Exponential
Smoothing (cont’d)
Dt
St 1 St 1 Tt
1
It
T t St St 1 Tt
1 1
Dt
It m 1 It
St
Ft n ( St nTt ) It n
t Dt St Tt It Ft
0 40 10
1 0.8
2 1.2
3 0.9
4 1.1
5
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 40 10
1 0.8 (40+10).8=40
2 1.2
3 0.9
4 1.1
5
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 40 10
1 40 0.8 (40+10).8=40
2 1.2
3 0.9
4 1.1
5
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 40 10
1 40 .2(40/.8)+.8(40+10)=50 0.8 (40+10).8=40
2 1.2
3 0.9
4 1.1
5
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 40 10
1 40 .2(40/.8)+.8(40+10)=50 .3(50-40)+.7(10)=10 0.8 (40+10).8=40
2 1.2
3 0.9
4 1.1
5
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 40 10
1 40 .2(40/.8)+.8(40+10)=50 .3(50-40)+.7(10)=10 0.8 (40+10).8=40
2 1.2
3 0.9
4 1.1
5 .4(40/50)+.6(.8)=.80
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 40 10
1 40 .2(40/.8)+.8(40+10)=50 .3(50-40)+.7(10)=10 0.8 (40+10).8=40
2 1.2 (50+10)1.2=72
3 0.9
4 1.1
5 .4(40/50)+.6(.8)=.80
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 40 10
1 40 .2(40/.8)+.8(40+10)=50 .3(50-40)+.7(10)=10 0.8 (40+10).8=40
2 70 1.2 (50+10)1.2=72
3 0.9
4 1.1
5 .4(40/50)+.6(.8)=.80
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 40 10
1 40 .2(40/.8)+.8(40+10)=50 .3(50-40)+.7(10)=10 0.8 (40+10).8=40
2 70 .2(70/1.2)+.8(50+10)=59.67 1.2 (50+10)1.2=72
3 0.9
4 1.1
5 .4(40/50)+.6(.8)=.80
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 40 10
1 40 .2(40/.8)+.8(40+10)=50 .3(50-40)+.7(10)=10 0.8 (40+10).8=40
2 70 .2(70/1.2)+.8(50+10)=59.67 .3(59.67-50)+.7(10)=9.90 1.2 (50+10)1.2=72
3 0.9
4 1.1
5 .4(40/50)+.6(.8)=.80
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 40 10
1 40 .2(40/.8)+.8(40+10)=50 .3(50-40)+.7(10)=10 0.8 (40+10).8=40
2 70 .2(70/1.2)+.8(50+10)=59.67 .3(59.67-50)+.7(10)=9.90 1.2 (50+10)1.2=72
3 0.9
4 1.1
5 .4(40/50)+.6(.8)=.80
6 .4(70/59.67)+.6(1.2)=1.19
7
8
9
10
11
12
t Dt St Tt It Ft
0 40 10
1 40 .2(40/.8)+.8(40+10)=50 .3(50-40)+.7(10)=10 0.8 (40+10).8=40
2 70 .2(70/1.2)+.8(50+10)=59.67 .3(59.67-50)+.7(10)=9.90 1.2 (50+10)1.2=72
3 0.9 (59.67+9.90)0.9=62.61
4 1.1
5 .4(40/50)+.6(.8)=.80
6 .4(70/59.67)+.6(1.2)=1.19
7
8
9
10
11
12
t Dt St Tt It Ft
0 40 10
1 40 .2(40/.8)+.8(40+10)=50 .3(50-40)+.7(10)=10 0.8 (40+10).8=40
2 70 .2(70/1.2)+.8(50+10)=59.67 .3(59.67-50)+.7(10)=9.90 1.2 (50+10)1.2=72
3 60 68.99 9.73 0.9 (59.67+9.90)0.9=62.61
4 88 78.97 9.8 1.1 86.58
5 70 88.52 9.73 .4(40/50)+.6(.8)=.80 71.02
6 120 98.78 9.89 .4(70/59.67)+.6(1.2)=1.19 116.84
7 100 109.46 10.12 0.89 96.48
8 130 119.18 10 1.11 132.22
9 0.8
10 1.2
11 0.9
12 1.1
We would like to forecast for
quarters 9-12 (at end of qtr. 8)
t Dt St Tt It Ft
0 40 10
1 40 .2(40/.8)+.8(40+10)=50 .3(50-40)+.7(10)=10 0.8 (40+10).8=40
2 70 .2(70/1.2)+.8(50+10)=59.67 .3(59.67-50)+.7(10)=9.90 1.2 (50+10)1.2=72
3 60 68.99 9.73 0.9 (59.67+9.90)0.9=62.61
4 88 78.97 9.8 1.1 86.58
5 70 88.52 9.73 .4(40/50)+.6(.8)=.80 71.02
6 120 98.78 9.89 .4(70/59.67)+.6(1.2)=1.19 116.84
7 100 109.46 10.12 0.89 96.48
8 130 119.18 10 1.11 132.22
9 0.8
10 1.2
11 0.9
12 1.1
t Dt St Tt It Ft
0 40 10
1 40 .2(40/.8)+.8(40+10)=50 .3(50-40)+.7(10)=10 0.8 (40+10).8=40
2 70 .2(70/1.2)+.8(50+10)=59.67 .3(59.67-50)+.7(10)=9.90 1.2 (50+10)1.2=72
3 60 68.99 9.73 0.9 (59.67+9.90)0.9=62.61
4 88 78.97 9.8 1.1 86.58
5 70 88.52 9.73 .4(40/50)+.6(.8)=.80 71.02
6 120 98.78 9.89 .4(70/59.67)+.6(1.2)=1.19 116.84
7 100 109.46 10.12 0.89 96.48
8 130 119.18 10 1.11 132.22
9 0.8 (119.18+(1)10).8=102.87
10 1.2
11 0.9
12 1.1
t Dt St Tt It Ft
0 40 10
1 40 .2(40/.8)+.8(40+10)=50 .3(50-40)+.7(10)=10 0.8 (40+10).8=40
2 70 .2(70/1.2)+.8(50+10)=59.67 .3(59.67-50)+.7(10)=9.90 1.2 (50+10)1.2=72
3 60 68.99 9.73 0.9 (59.67+9.90)0.9=62.61
4 88 78.97 9.8 1.1 86.58
5 70 88.52 9.73 .4(40/50)+.6(.8)=.80 71.02
6 120 98.78 9.89 .4(70/59.67)+.6(1.2)=1.19 116.84
7 100 109.46 10.12 0.89 96.48
8 130 119.18 10 1.11 132.22
9 0.8 (119.18+(1)10).8=102.87
10 1.2 (119.18+(2)10)1.2=166.95
11 0.9
12 1.1
t Dt St Tt It Ft
0 40 10
1 40 .2(40/.8)+.8(40+10)=50 .3(50-40)+.7(10)=10 0.8 (40+10).8=40
2 70 .2(70/1.2)+.8(50+10)=59.67 .3(59.67-50)+.7(10)=9.90 1.2 (50+10)1.2=72
3 60 68.99 9.73 0.9 (59.67+9.90)0.9=62.61
4 88 78.97 9.8 1.1 86.58
5 70 88.52 9.73 .4(40/50)+.6(.8)=.80 71.02
6 120 98.78 9.89 .4(70/59.67)+.6(1.2)=1.19 116.84
7 100 109.46 10.12 0.89 96.48
8 130 119.18 10 1.11 132.22
9 0.8 (119.18+(1)10).8=102.87
10 1.2 (119.18+(2)10)1.2=166.95
11 0.9 (119.18+(3)10)0.9=134.00
12 1.1
t Dt St Tt It Ft
0 40 10
1 40 .2(40/.8)+.8(40+10)=50 .3(50-40)+.7(10)=10 0.8 (40+10).8=40
2 70 .2(70/1.2)+.8(50+10)=59.67 .3(59.67-50)+.7(10)=9.90 1.2 (50+10)1.2=72
3 60 68.99 9.73 0.9 (59.67+9.90)0.9=62.61
4 88 78.97 9.8 1.1 86.58
5 70 88.52 9.73 .4(40/50)+.6(.8)=.80 71.02
6 120 98.78 9.89 .4(70/59.67)+.6(1.2)=1.19 116.84
7 100 109.46 10.12 0.89 96.48
8 130 119.18 10 1.11 132.22
9 0.8 (119.18+(1)10).8=102.87
10 1.2 (119.18+(2)10)1.2=166.95
11 0.9 (119.18+(3)10)0.9=134.00
12 1.1 (119.18+(4)10)1.1=175.07
E.S. Homework, Ex. 3
t Dt St Tt It Ft
0 93 6
1 1
2 0.7
3 0.5
4 1.8
5
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 93 6
1 1 (93+6)x1.00=99.00
2 0.7
3 0.5
4 1.8
5
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 93 6
1 101 1 (93+6)x1.00=99.00
2 0.7
3 0.5
4 1.8
5
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 93 6
1 101 .4(101/1.00)+.6(99)=99.80 1 (93+6)x1.00=99.00
2 0.7
3 0.5
4 1.8
5
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 93 6
1 101 .4(101/1.00)+.6(99)=99.80 .3(99.8-93)+.7(6)=6.24 1 (93+6)x1.00=99.00
2 0.7
3 0.5
4 1.8
5
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 93 6
1 101 .4(101/1.00)+.6(99)=99.80 .3(99.8-93)+.7(6)=6.24 1 (93+6)x1.00=99.00
2 0.7
3 0.5
4 1.8
5 .6(101/99.8)+.4(1.00)=1.01
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 93 6
1 101 .4(101/1.00)+.6(99)=99.80 .3(99.8-93)+.7(6)=6.24 1 (93+6)x1.00=99.00
2 0.7 (99.8+6.24)x0.7=74.23
3 0.5
4 1.8
5 .6(101/99.8)+.4(1.00)=1.01
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 93 6
1 101 .4(101/1.00)+.6(99)=99.80 .3(99.8-93)+.7(6)=6.24 1 (93+6)x1.00=99.00
2 70 0.7 (99.8+6.24)x0.7=74.23
3 0.5
4 1.8
5 .6(101/99.8)+.4(1.00)=1.01
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 93 6
1 101 .4(101/1.00)+.6(99)=99.80 .3(99.8-93)+.7(6)=6.24 1 (93+6)x1.00=99.00
2 70 .4(70/0.7)+.6(99.8+6.24)=103.62 0.7 (99.8+6.24)x0.7=74.23
3 0.5
4 1.8
5 .6(101/99.8)+.4(1.00)=1.01
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 93 6
1 101 .4(101/1.00)+.6(99)=99.80 .3(99.8-93)+.7(6)=6.24 1 (93+6)x1.00=99.00
2 70 .4(70/0.7)+.6(99.8+6.24)=103.62 .3(103.62-99.8)+.7(6.24)=5.51 0.7 (99.8+6.24)x0.7=74.23
3 0.5
4 1.8
5 .6(101/99.8)+.4(1.00)=1.01
6
7
8
9
10
11
12
t Dt St Tt It Ft
0 93 6
1 101 .4(101/1.00)+.6(99)=99.80 .3(99.8-93)+.7(6)=6.24 1 (93+6)x1.00=99.00
2 70 .4(70/0.7)+.6(99.8+6.24)=103.62 .3(103.62-99.8)+.7(6.24)=5.51 0.7 (99.8+6.24)x0.7=74.23
3 0.5
4 1.8
5 .6(101/99.8)+.4(1.00)=1.01
6 .6(70/103.62)+.4(0.7)=0.69
7
8
9
10
11
12
t Dt St Tt It Ft
0 93 6
1 101 .4(101/1.00)+.6(99)=99.80 .3(99.8-93)+.7(6)=6.24 1 (93+6)x1.00=99.00
2 70 .4(70/0.7)+.6(99.8+6.24)=103.62 .3(103.62-99.8)+.7(6.24)=5.51 0.7 (99.8+6.24)x0.7=74.23
3 0.5 (103.62+5.51)x0.5=54.57
4 1.8
5 .6(101/99.8)+.4(1.00)=1.01
6 .6(70/103.62)+.4(0.7)=0.69
7
8
9
10
11
12
t Dt St Tt It Ft
0 93 6
1 101 .4(101/1.00)+.6(99)=99.80 .3(99.8-93)+.7(6)=6.24 1 (93+6)x1.00=99.00
2 70 .4(70/0.7)+.6(99.8+6.24)=103.62 .3(103.62-99.8)+.7(6.24)=5.51 0.7 (99.8+6.24)x0.7=74.23
3 58 111.88 6.34 0.5 (103.62+5.51)x0.5=54.57
4 205 116.49 5.82 1.8 212.8
5 120 120.91 5.4 .6(101/99.8)+.4(1.00)=1.01 123.53
6 94 130.28 6.59 .6(70/103.62)+.4(0.7)=0.69 87.15
7 70 137.02 6.64 0.51 69.8
8 250 142.38 6.26 1.78 255.71
9 1
10 0.71
11 0.51
12 1.77
t Dt St Tt It Ft
0 93 6
1 101 .4(101/1.00)+.6(99)=99.80 .3(99.8-93)+.7(6)=6.24 1 (93+6)x1.00=99.00
2 70 .4(70/0.7)+.6(99.8+6.24)=103.62 .3(103.62-99.8)+.7(6.24)=5.51 0.7 (99.8+6.24)x0.7=74.23
3 58 111.88 6.34 0.5 (103.62+5.51)x0.5=54.57
4 205 116.49 5.82 1.8 212.8
5 120 120.91 5.4 .6(101/99.8)+.4(1.00)=1.01 123.53
6 94 130.28 6.59 .6(70/103.62)+.4(0.7)=0.69 87.15
7 70 137.02 6.64 0.51 69.8
8 250 142.38 6.26 1.78 255.71
9 1 (142.38+(1)6.26)1.00=148.64
10 0.71
11 0.51
12 1.77
t Dt St Tt It Ft
0 93 6
1 101 .4(101/1.00)+.6(99)=99.80 .3(99.8-93)+.7(6)=6.24 1 (93+6)x1.00=99.00
2 70 .4(70/0.7)+.6(99.8+6.24)=103.62 .3(103.62-99.8)+.7(6.24)=5.51 0.7 (99.8+6.24)x0.7=74.23
3 58 111.88 6.34 0.5 (103.62+5.51)x0.5=54.57
4 205 116.49 5.82 1.8 212.8
5 120 120.91 5.4 .6(101/99.8)+.4(1.00)=1.01 123.53
6 94 130.28 6.59 .6(70/103.62)+.4(0.7)=0.69 87.15
7 70 137.02 6.64 0.51 69.8
8 250 142.38 6.26 1.78 255.71
9 1 (142.38+(1)6.26)1.00=148.64
10 0.71 (142.38+(2)6.26)0.71=109.98
11 0.51
12 1.77
t Dt St Tt It Ft
0 93 6
1 101 .4(101/1.00)+.6(99)=99.80 .3(99.8-93)+.7(6)=6.24 1 (93+6)x1.00=99.00
2 70 .4(70/0.7)+.6(99.8+6.24)=103.62 .3(103.62-99.8)+.7(6.24)=5.51 0.7 (99.8+6.24)x0.7=74.23
3 58 111.88 6.34 0.5 (103.62+5.51)x0.5=54.57
4 205 116.49 5.82 1.8 212.8
5 120 120.91 5.4 .6(101/99.8)+.4(1.00)=1.01 123.53
6 94 130.28 6.59 .6(70/103.62)+.4(0.7)=0.69 87.15
7 70 137.02 6.64 0.51 69.8
8 250 142.38 6.26 1.78 255.71
9 1 (142.38+(1)6.26)1.00=148.64
10 0.71 (142.38+(2)6.26)0.71=109.98
11 0.51 (142.38+(3)6.26)0.51=82.19
12 1.77