270 Cheat Sheet - Final - FORECASTING A statistical...

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FORECASTING: A statistical estimate of future demand , that can be used to plan current activities . Principle: 1.A lways wrong & always include measure of error 2.The longer the horizon , the larger the error 3. Method should be chosen 取取取取取取取 Vital: 取取 & 取取 , 取取 & 取取 , 取取 & 取取 A. Qualitative methods 1. Executive judgement (based on 取取 & 取取 ) 2. Market research (surveys, interviews) 3. Panel consensus (meetings of executives, salespeople, and customers) 取取取取 4. [Delphi method: 1. Choose experts to participate representing a variety of points of view => 2. Obtain forecasts from all participants => 3. the results and redistribute them to the participants along with appropriate new questions => 4 . 取取取 , refining forecasts and conditions, and again develop new questions to distribute to all participants => 5. Repeat Step 4 as necessary and distribute the final results 取取取取取取取取取取 取取 取取取取取取取取取 取取取取 Major Advantage: Every member can fill in the questionnaire independently without being influenced or under pressure by the boss. Employees 取取 give their true opinion when their boss has a different opinion. ] B. Time series analysis A sequence of measurements made of process which is evolving over time 1. Predict the future based on past data 2. Often for short term decisions 3. Analysis involves special time-dependent effects: Trend, seasonality, periodicity 4. Common approaches a. Simple moving average F t = (A t-1 +A t-2 + A t-3 +…+ A t-n )/n F t the forecast for period t A t-1 the actual demand in period t-1 Recent observations are more “informative” Pros: Simple, only one decision to make, select Cons: weighs all previous demand equally ·Advantages of more periods: 1. better estimate 2.The effect of randomness is reduced 3. 没没 trend => more data pts => lower error ·Disadvantages of more periods: 1. Respond slowly to permanent changes . 2. Trend => more data pts => higher error . 取取取取取取取取 data pts 取取取 weight Forecast error = A t – F t error better 没没 ·MAD = ∑ |A – F | / T CONS: 取取取取取取取 取取取 取取取取 : 取取取取 ·MSE = ∑ (A t – F ) 2 / T ·MAPE = 100 ∑ [ |A – F t | / A t ] / T b. Weighted moving average F t = w 1 A t-1 + w 2 A t-2 + w 3 A t-3 +…+ w n A t-n [ ∑w i =1 ] Advantages: Flexibility; Greater weight=>recent data pts Disadvantages: Need to decide all the weights Solution : c. Exponential smoothing F t = F t-1 + α (A t-1 - F t-1 ) = α A t-1 + (1- α )F t-1 [ α 没没 ] d. Regression analysis - Casual relationship - Diffusion Models 1.Forecasting the adoption of new products is particularly hard : no historical information 2.The sales patterns of new products go through three phases: Rapid growth, Maturity, Decline 3. A good parametric approach to estimate the demand track of a new product over time - Bass model=> if no historical info, using this method Innovators : Early adopters, Not influenced by other individuals , Driven by advertisement or some other external effec t 没没没 Imitators : Influenced by other buyers , Word of mouth,
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  • Fall '13
  • LP, order quantity

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