Topic-12 Forecasting.ppt

# Causal methods causal methods linear regression

• Homework Help
• 55

This preview shows pages 46–55. Sign up to view the full content.

Causal Methods Causal Methods Linear Regression Linear Regression Sales, Sales, Y Advertising, Advertising, X Month Month (000 units) (000 units) (000 \$) (000 \$) XY XY X X 2 Y Y 2 1 264 264 2.5 2.5 660.0 660.0 6.25 6.25 69,696 69,696 2 116 116 1.3 1.3 150.8 150.8 1.69 1.69 13,456 13,456 3 165 165 1.4 1.4 231.0 231.0 1.96 1.96 27,225 27,225 4 101 101 1.0 1.0 101.0 101.0 1.00 1.00 10,201 10,201 5 209 209 2.0 2.0 418.0 418.0 4.00 4.00 43,681 43,681 a a = = Y Y b b X X b b = = XY XY n n XY XY X X 2 2 n n X X 2 2

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

Causal Methods Causal Methods Linear Regression Linear Regression Sales, Sales, Y Advertising, Advertising, X Month Month (000 units) (000 units) (000 \$) (000 \$) XY XY X X 2 Y Y 2 1 264 264 2.5 2.5 660.0 660.0 6.25 6.25 69,696 69,696 2 116 116 1.3 1.3 150.8 150.8 1.69 1.69 13,456 13,456 3 165 165 1.4 1.4 231.0 231.0 1.96 1.96 27,225 27,225 4 101 101 1.0 1.0 101.0 101.0 1.00 1.00 10,201 10,201 5 209 209 2.0 2.0 418.0 418.0 4.00 4.00 43,681 43,681 Total Total 855 855 8.2 8.2 1560.8 1560.8 14.90 14.90 164,259 164,259 Y = 171 = 171 X = 1.64 = 1.64 n XY XY X X Y [ n X X 2 – ( – ( X ) ) 2 ][ ][ n Y Y 2 – ( – ( Y ) ) 2 ] r r = =
Selection of Forecasting Techniques Principle of Forecasting : * When past data are known as good indicator for the future. * The pattern of the future can be recognized from the past data. Qualitative Techniques are used when: * Data unavailable * Unknown pattern change

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

Selection of Forecasting Techniques (II) Quantitative Techniques: A. Time series models: use when past demand is the best indicator for future demand. B: Causal relationship model: used when the demand of an item is dependent on other underlying factors.
Practical Forecasting Problems 1. Practical forecasting issues: * Inaccuracy * Inconsistency * Cost and accuracy tradeoff * Data unavailability * fitness and predictability “A model that best fits the past data may not be the best predictive one for the future due to demand pattern changes.”

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

Criteria for Selecting a Forecasting Method Cost and accuracy Data available Time span Nature of products and services Impulse response and noise dampening
Practical Forecasting Problems 2. new direction in forecasting: * integrated forecasting system: to reduce inconsistency * Combination forecasting models: To reduce inaccuracy through: ---model combinations ---result combinations

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

Forecasting with Computers Forecasting software packages are widely available Three categories Manual systems Semiautomatic systems Automatic systems Package selection depends on: Fit with musts and wants Costs of the package Level of clerical support required, and Amount of programmer maintenance required
See Guidelines for Using <POM – Windows> Software for Forecasting Problems.

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

Written Assignment - is due …..
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern