Forecasting

Forecasting - Forecasting Time series forecasting models...

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11 Forecasting Time series forecasting models Causal relationship Focus forecasting Forecast errors
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21 Demand Management Take an active role to influence demand Advertising, pricing, sales force management Take a passive role and simply respond to demand Expense to advertise, demand beyond control… Forecasting Demand side how much, what, when, service, willingness to accept substitutes Supply side price, availability, costs and reliability of services, lead time
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31 Components of demand
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41
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51
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61 Simple Moving Average Model: Example n A A A F n t t t t - - - + + + = ... 2 1
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71 How to choose n?
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81 Weighted Moving Average The simple moving average gives equal weight to each component of the moving average database, a weighted moving average allows any weights to be placed on each element. Model: 1 ... 1 2 2 1 1 = + + + = = - - - n i i n t n t t t w A w A w A w F
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91 Example
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10 1 Choosing Weights Experience and trial and error Most recent data with higher weighting Seasonal data
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11 1 Exponential Smoothing Main disadvantage of moving average: all individual elements must be carried as data Model: Data The most recent forecast The actual demand that occurred for that forecast period A smoothing constant α ) ( 1 1 1 - - - - + = t t t t F A F F α
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12 1 Example
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13 1
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14 1 Questions Beside the most recent past data, does the exponential smoothing method use more distant data? Usually, the most recent observations have the highest predictive value. How does this method reflect this principle, if at all?
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15 1 1 2 3 2 3 3 1 2 2 2 1 2 2 1 1 1 1 1 ) 1 ( ) 1 ( ) 1 ( ) 1 ( ) 1 ( ] ) 1 )[( 1 ( ) 1 ( ) ( - - - - - - - - - - - - - - - + - + - + - = + - + - = + + - - = + - = - + = t t t t t t t t t t t t t t t t A A A F A A F A A F A F F A F F α (Optional)
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Forecasting - Forecasting Time series forecasting models...

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