Forecasting_Example

Forecasting_Example - Forecasting Example To know the...

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Forecasting Example “To know the future is impossible. To predict the future is easy. To accurately predict the future is what separates the Bill Gates’s from the Barney Fifes.” - Dr. Statslove
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Foercasting Rules 1 and 2 1. DTDP – Draw the darn picture! (This is slightly paraphrased from its original form.) Recall, this rule also applies to regression. 2. Select the most appropriate procedure based on the picture.
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“Appropriate” vs. “Effective” A forecasting/regression procedure is appropriate if it requires conditions present in the data set, and no other conditions. A forecasting/regression procedure is effective if it has a strong fit to the data.
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Forecasting Conditions In forecasting, the conditions for which to assess are the time-series components: 1. irregular (random) 2. trend 3. seasonal 4. cyclical
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Scatterplot of Simpson’s Rolls vs. Quarter 0 10 20 30 40 50 1 3 5 7 9 11 13 15 Quarter Rolls
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Description Irregular? Yes, since the pattern is not perfect. (Every time-series possesses an irregular component.) Trend? Yes, there is a positive trend over the three years.
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Description (Cont.) Seasonal? Yes, there is a pattern that is
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Forecasting_Example - Forecasting Example To know the...

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