Unformatted text preview: ES carries all past history. MA eliminates “bad” data
after N periods
MA requires all N past data points while ES only
requires last forecast and last observation.
requires 12 Regression Analysis
Regression Methods can be used when a trend is
present. Let (x1, y1)…. be n paired data points for two
variables which x iis the independent variable and y iis the
dependent one (on x). ˆ
y = a + bx ˆ
y is the predicted value of the response y. In forecasting
problems, usually the independent variable x iis time, t.
We have to estimate the values of a and b.
and Regression Analysis b= N ∑ ty − ∑ t ∑ y
2 N ∑ t − (∑ t ) a= 2 ∑ y − b∑ t
N 13 Example
Seasonality corresponds to a pattern in the data that
repeats at regular intervals.
There may be multiple seasonal factors: c1 , c2 , . . . , cN
where i = 1 is first period of season, i = 2 is second
period of the season, etc..
ci = 1.25 implies 25% higher than the baseline on avg.
ci = 0.75 implies 25% lower than the baseline on avg. 14 Seasonality Illustration Method of Estimating Seasonal
Compute the sample mean of the entire data set (should
be at least several seasons of data).
Divide each observation by the sample mean. (This
gives a factor for each observation.)
Average the factors for like periods in a season.
The resulting N numbers will ex...
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