OUTLINE Questions? Quiz Go over homework Next homework Forecasting.

Slides:



Advertisements
Similar presentations
Forecasting Models With Linear Trend. Linear Trend Model If a modeled is hypothesized that has only linear trend and random effects, it will be of the.
Advertisements

Bina Nusantara Model Ramalan Pertemuan 14: Mata kuliah: K0194-Pemodelan Matematika Terapan Tahun: 2008.
Time Series Analysis Autocorrelation Naive & Simple Averaging
T T18-03 Exponential Smoothing Forecast Purpose Allows the analyst to create and analyze the "Exponential Smoothing Average" forecast. The MAD.
Forecasting 5 June Introduction What: Forecasting Techniques Where: Determine Trends Why: Make better decisions.
Class 20: Chapter 12S: Tools Class Agenda –Answer questions about the exam News of Note –Elections Results—Time to come together –Giants prove that nice.
Analyzing and Forecasting Time Series Data
Chapter 12 - Forecasting Forecasting is important in the business decision-making process in which a current choice or decision has future implications:
Forecasting.
Chapter 3 Forecasting McGraw-Hill/Irwin
Forecasting Demand Chapter 11. Forecasting Demand Subjective Models Delphi Method Cross-Impact Historical Analogy Causal Models Regression Models Econometric.
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 5-1 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ PERTEMUAN 14.
Chapter 13 Forecasting.
T T18-05 Trend Adjusted Exponential Smoothing Forecast Purpose Allows the analyst to create and analyze the "Trend Adjusted Exponential Smoothing"
FORECASTING. Types of Forecasts Qualitative Time Series Causal Relationships Simulation.
Demand Management and Forecasting. Types of Forecasts Qualitative Time Series Causal Relationships Simulation.
Learning Objectives  Recommend the appropriate forecasting model for a given situation.  Conduct a Delphi forecasting exercise.  Describe.
Part II – TIME SERIES ANALYSIS C2 Simple Time Series Methods & Moving Averages © Angel A. Juan & Carles Serrat - UPC 2007/2008.
Forecasting McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
T T18-06 Seasonal Relatives Purpose Allows the analyst to create and analyze the "Seasonal Relatives" for a time series. A graphical display of.
Slides 13b: Time-Series Models; Measuring Forecast Error
CHAPTER 18 Models for Time Series and Forecasting
Homework Solution Weighted Averages - Exponential Smoothing - Trend Cool-Man Air Conditioners Manual ManualComputer-Based TM MGMT E-5070 Part B.
1 Demand Planning: Part 2 Collaboration requires shared information.
LSS Black Belt Training Forecasting. Forecasting Models Forecasting Techniques Qualitative Models Delphi Method Jury of Executive Opinion Sales Force.
Introduction to Forecasting COB 291 Spring Forecasting 4 A forecast is an estimate of future demand 4 Forecasts contain error 4 Forecasts can be.
Chapter 16: Time-Series Analysis
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Time Series Forecasting Chapter 16.
McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Time Series Forecasting Chapter 13.
Forecasting to account for seasonality Regularly repeating movements that can be tied to recurring events (e.g. winter) in a time series that varies around.
Introduction to Forecasting IDS 605 Spring Forecasting 4 A forecast is an estimate of future demand.
Time Series Analysis and Forecasting
Time-Series Forecasting Overview Moving Averages Exponential Smoothing Seasonality.
1 Forecasting Formulas Symbols n Total number of periods, or number of data points. A Actual demand for the period (  Y). F Forecast demand for the period.
1 1 Slide Forecasting Professor Ahmadi. 2 2 Slide Learning Objectives n Understand when to use various types of forecasting models and the time horizon.
Forecasting. 預測 (Forecasting) A Basis of Forecasting In business, forecasts are the basis for budgeting and planning for capacity, sales, production and.
Maintenance Workload Forecasting
MNG221 - Management Science Forecasting. Lecture Outline Forecasting basics Moving average Exponential smoothing Linear trend line Forecast accuracy.
Ch 5-1 © 2004 Pearson Education, Inc. Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ Ostwald and McLaren / Cost Analysis and Estimating.
Welcome to MM305 Unit 5 Seminar Prof Greg Forecasting.
Economics 173 Business Statistics Lecture 26 © Fall 2001, Professor J. Petry
Forecasting Demand. Forecasting Methods Qualitative – Judgmental, Executive Opinion - Internal Opinions - Delphi Method - Surveys Quantitative - Causal,
Irwin/McGraw-Hill © Andrew F. Siegel, 1997 and l Chapter 14 l Time Series: Understanding Changes over Time.
Economics 173 Business Statistics Lecture 27 © Fall 2001, Professor J. Petry
Module: Forecasting Operations Management as a Competitive Weapon.
1 1 Chapter 6 Forecasting n Quantitative Approaches to Forecasting n The Components of a Time Series n Measures of Forecast Accuracy n Using Smoothing.
CHAPTER 12 FORECASTING. THE CONCEPTS A prediction of future events used for planning purpose Supply chain success, resources planning, scheduling, capacity.
3-1Forecasting CHAPTER 3 Forecasting McGraw-Hill/Irwin Operations Management, Eighth Edition, by William J. Stevenson Copyright © 2005 by The McGraw-Hill.
Forecasting Demand. Problems with Forecasts Forecasts are Usually Wrong. Every Forecast Should Include an Estimate of Error. Forecasts are More Accurate.
1 Decision Making ADMI 6510 Forecasting Models Key Sources: Data Analysis and Decision Making (Albrigth, Winston and Zappe) An Introduction to Management.
Assignable variation Deviations with a specific cause or source. forecast bias or assignable variation or MSE? Click here for Hint.
Forecast 2 Linear trend Forecast error Seasonal demand.
3-1Forecasting Weighted Moving Average Formula w t = weight given to time period “t” occurrence (weights must add to one) The formula for the moving average.
T T18-02 Weighted Moving Average Forecast Purpose Allows the analyst to create and analyze the "Weighted Moving Average" forecast for up to 5.
TIME SERIES MODELS. Definitions Forecast is a prediction of future events used for planning process. Time Series is the repeated observations of demand.
Welcome to MM305 Unit 5 Seminar Dr. Bob Forecasting.
Welcome to MM305 Unit 5 Seminar Forecasting. What is forecasting? An attempt to predict the future using data. Generally an 8-step process 1.Why are you.
Forecasting Demand Chapter 11.
Forecasts.
Forecasting Methods Dr. T. T. Kachwala.
Quantitative Analysis for Management
Exponential Smoothing with Trend Adjustment - continued
Standard Deviation Calculate the mean Given a Data Set 12, 8, 7, 14, 4
Forecasting Techniques
Forecasting Elements of good forecast Accurate Timely Reliable
assignable variation Deviations with a specific cause or source.
Forecasting is an Integral Part of Business Planning
OUTLINE Questions? Quiz Results Quiz on Thursday Continue Forecasting
Forecasting - Introduction
Exponential Smoothing
Presentation transcript:

OUTLINE Questions? Quiz Go over homework Next homework Forecasting

General approaches to forecasting How do you think people predicted events before there were mathematical ways of doing it? How do you as an individual predict things?

What will we cover? Regression - equations Smoothing MAV (Moving average) with MAD (mean average deviation of the error) Average with Std dev (include all with prediction of probabilities) Exponential (select a smoothing constant) Seasonal (when substantial seasonal variations exist) Remove the seasonality Calculate the trend and forecast Return the seasonality to the trend line

Regression equations for confidence and prediction Confidence Interval for the regression equation at Xo: ± 𝑡 𝛼 2 ,𝑛−2 𝑀𝑆 𝐸 1 𝑛 + 𝑥 0 − 𝑥 2 𝑆 𝑥𝑥 Prediction for an average of k y values at Xo ± 𝑡 𝛼 2 ,𝑛−2 𝑀𝑆 𝐸 1 𝑘 + 1 𝑛 + 𝑥 0 − 𝑥 2 𝑆 𝑥𝑥 Prediction for an individual y value at Xo ± 𝑡 𝛼 2 ,𝑛−2 𝑀𝑆 𝐸 1+ 1 𝑛 + 𝑥 0 − 𝑥 2 𝑆 𝑥𝑥 , where 𝑆 𝑥𝑥 = 𝑖=1 𝑛 𝑥 𝑖 − 𝑥 2 for each of each above

MAV – Moving Average Average the last n periods of demand Usually n =3 to 4 periods Used when you don’t want to go too far back in time and you think the last few data points are the most representative

MAD Mean average deviation Sum of the absolute deviations from the mean Calculated on the forecast compared to the actual

Exponential Smoothing Use a constant smoothing constant (α), usually between 0.2 and 0.4 Takes all values into account, but gives a higher weight to the more recent values Forecast = previous forecast (α) + previous actual(1- α)

Calculate the trend line and extend for the forecast Seasonal Seasonal (when substantial seasonal variations exist) – works best when several years of data are available Remove the seasonality Calculate the trend and forecast Return the seasonality to the trend line Seasonal factor – ratio of current demand divided by the average for the year (a high demand will have a seasonal factor greater than 1) Remove seasonality by dividing each demand by its seasonal factor (each demand will move closer to the average) Calculate the trend line and extend for the forecast Multiply each demand by its seasonal factor

Seasonal Example