Forecasting_Thumbnail_Notes

Forecasting_Thumbnail_Notes - Forecasting Thumbnail Notes...

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Forecasting Thumbnail Notes Purpose: To use past data to predict future observations of business variables. Situation: We have an explanatory variable that is the given time period and some response variable that needs to be predicted for the future. Steps in Forecasting Analysis 1. Collect appropriate data. 2. Determine if the response variable tends to vary over time in some repeatable pattern. If not, consider other statistical methods. 3. Select the appropriate forecasting model based on the pattern in the data. 4. Fit the model to past data using the computer. 5. Assess model effectiveness for future data and adjust as necessary. * - Note here that the model forecasting process consists of two stages: the retrospective phase, and the prospective phase. During the retrospective phase, we use past data to select and fit our model. Since the model is fit to the data, it will tend to show a better fit for the past data than for future data. The use of our model for predicting future data is the prospective phase. Time Series Components
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Forecasting_Thumbnail_Notes - Forecasting Thumbnail Notes...

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