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ANLT5060 Unit 3 Assignment 1.docx - 1 Forecasting...

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1Forecasting Evaluation MethodsCarlos RoblesAnalytics, Capella UniversityANLT 5060: Applied ForecastingDr. HaneyOctober 30th, 2022
2Forecasting Evaluation MethodsForecasting techniques should ideally be assessed in the circumstances in which they willbe employed. The evaluation process is driven by the requirement to compare procedures toplausible alternatives. Testing assumptions, testing data and procedures, duplicating findings, andevaluating outputs are the four phases that make up evaluation.The majority of testing concepts for forecasting methodologies are based on widely usedmethodological practices, including predefining criteria or obtaining a large sample of forecastmistakes. However, many studies and forecasters frequently disregard these rules. Some rules,including choosing the most accurate time-series model without using R-square, Mean SquareError, or within-sample fit of the model, may come as a surprise. The four forecasting methods Ichoose are the following:Straight Line Method - One of the simplest and most straight forward forecastingtechniques is the straight-line method. A financial analyst forecasts future revenue growthusing historical data and trends.
3Moving Averages - Moving averages are a smoothing technique that creates an estimateof future values by analyzing the underlying pattern of a set of data. The 3-month and 5-month moving averages are the two most popular versions.Simple Linear Regression - A common method for examining the relationship betweenvariables in order to make predictions is regression analysis. By performing a regressionanalysis on the two variables, we will examine the correlation between radioadvertisements and revenue in this example.

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