Forecasting - Fundamental Forecasting Approaches: o...

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1/23/12 Forecasting: Types of Forecasts: o Short-term vs. Long-term Short-term is more accurate Should have several time periods (short, medium, long) o Micro vs. Macro Macro forecast is easier Predict in dollars & sales instead of units o Type of output Point forecast Interval forecast People don’t like it but it’s more honest Density forecast Curvature – becomes wider or narrower o Level in the supply chain Dependent demand What other levels in supply chain are you dependent on? Independent demand Derived demand Not directly related to the product being sold (ie: transportation) Forecasting Steps: 1. Problem Formulation 2. Data Collection 3. Data manipulation and cleaning (making it useable) 4. Model building 5. Model evaluation 6. Model implementation (the actual forecast) 7. Forecast evaluation
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Unformatted text preview: Fundamental Forecasting Approaches: o Judgmental Human knowledge; based on opinion Potential bias & reaction to immediate events or experience Salesperson surveys (expert opinion) Delphi approach (group approach) o Relational Cause & effect modeling Purchasing manager surveys o Experimental Generally used for brand new product (no past data) Test markets o Time Series Use past data to build a model & observe what’s happening over periods of time More reliable forecast Two types of info: • Pattern forecast • Noise ignore (random variation in data that cannot be explained) Can categorize into seasonality, trend, & noise Seasonality over several years = cycle D(t) = (L+Tt)[S(t)]+r *r = random/error; T = trend...
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This note was uploaded on 02/01/2012 for the course ECONOMICS 421 taught by Professor Landon-lane during the Spring '12 term at Rutgers.

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Forecasting - Fundamental Forecasting Approaches: o...

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