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Ch03_FC2 - Copy

# Ch03_FC2 - Copy - FORECASTING-II You can get an A for sure...

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FORECASTING-II You can get an A for sure but you need to have insights and problem solving skills in forecasting!

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Time Series Forecasting Driving while looking in a rear view mirror: Naive Moving Average Weighted Moving Average Exponential Smoothing Trend Adjusted Forecasting
Naive Forecasts Uh, give me a minute .... We sold 250 wheels last week .... Now, next week we should sell ....

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Forecasting Problem Month Demand Forecast 1 492 2 470 3 485 4 493 5 498 6 492 7 ? 8 9 10 ? FORECASTING PROBLEM
Naïve Method You are here! Forecast next period = Demand this period F t+1 = A t Period t Period t+1 Period t+k

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Forecasting: Naïve Method Month t At Ft et abs(et) et*et Abs. % Error 1 492 2 470 492 -22.00 22.00 484.00 4.68 3 485 470 15.00 15.00 225.00 3.09 4 493 485 8.00 8.00 64.00 1.62 5 498 493 5.00 5.00 25.00 1.00 6 492 498 -6.00 6.00 36.00 1.22 7 492 Sum 2930 0.0 56.0 834.0 11.6 RMSE MFE MAD MSE MAPE 12.9 0.0 11.2 166.8 2.3 NAIVE METHOD
MOVING AVERAGE Decide how many past demands to average over? = say N. A t + A t-1 + … + A t-N+1 F t+ 1 = N

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Forecasting: Moving Average Number of Periods to Average N = 3 Month t At Ft et abs(et) et*et Abs. % Error 1 492 2 470 3 485 4 493 482.33 10.67 10.67 113.78 2.16 5 498 482.67 15.33 15.33 235.11 3.08 6 492 492.00 0.00 0.00 0.00 0.00 7 494.33 Sum 2930 26.0 26.0 348.9 5.2 RMSE MFE MAD MSE MAPE 10.8 8.7 8.7 116.3 1.7
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Ch03_FC2 - Copy - FORECASTING-II You can get an A for sure...

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