# Ma11 - Changes in the trend can be due to changes in...

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Quantitative Forecasting Methods Quantitative forecasting methods are used when the situation is stable and historical data exists for sales. This kind of forecasting is particularly applicable to existing products and current technology. It involves using mathematical techniques. There are a number of these methods, including the naïve approach, moving averages, exponential smoothing, trend projection and linear regression. All of these are time-series models, with the exception of linear regression, which is an associative model. Time-series models assume that you have a set of evenly- spaced numerical data that can be used to forecast future demand. These techniques assume that the factors that were influential in the past will continue to be influential in the future. A time-series starts with some kind of average demand over a long period of time. It is then influenced by the following factors of demand: --Trend component: A persistent, overall upward or downward pattern over time, which typically lasts for several years.

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Unformatted text preview: Changes in the trend can be due to changes in population, technology, age, culture, etc.--Seasonal component: A regular pattern of up-and-down fluctuations that occurs within a single year. Note that a season can be less than a year as well. --Cyclical component: A repeating up-and-down movement that takes place over multiple years. These movements are often affected by the business cycle, as well as political and economic fluctuations. There are often causal (or associative) relationships between the variables that explain a cyclical behavior.--Random component: No forecast is perfect, and there is always a difference between what we predict and what we actually observe. The residual fluctuation refers to the difference between what actually happened and what we predicted. These erratic, unsystematic fluctuations are caused by unforeseen events. They are usually of short duration and they do not repeat....
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Ma11 - Changes in the trend can be due to changes in...

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