{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Forecasting notes on time series

Forecasting notes on time series - Forecasting Some Notes...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Forecasting: Some Notes on Time Series Perhaps one of the most important skills that a manager must be trained to have is forecasting. This is because forecasting is so pervasive in everyday aspects of any organization. The daily activities and decisions of a manager are all affected by forecasts made. For example, budgeting requires forecasting. How could you prepare a budget without predicting the future? Every line item is based on a forecast. Purchasing, inventory, demand, hiring, firing, manpower planning, capacity planning, advertising are all directly linked to forecasting and the list goes on. Types of Forecasting Your book writes about qualitative vs. quantitative tools in forecasting. It is important to note that although this book is mainly devoted to the quantitative models of forecasting, as a practitioner, one must always update the quantitative forecasts with qualitative data and methods to maximize accuracy. Quantitative tools are designed to Error in Forecasting Forecasting goes hand-in-hand with "error"! A forecast inherently will have some level of inaccuracy in it; otherwise, it would not be forecasting, it would be called magic and looking into a crystal ball. So, the art of forecasting is not only in applying the models correctly, but also to make sure that the data (time series) fits well to a forecasting tool that predicts the future behavior of the variable well (i.e., in a manner that inaccuracy or error from the forecast is minimized). So when you need to forecast a variable you must try different models, and make forecasts with several and compare measures of accuracy (such as MAD or MSE or MAPE, etc.). The method that generates the least error should
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}