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Introduction to Forecasting

Introduction to Forecasting. Mechanical Models Time Series Analysis Barometric Models Econometric Models Technological Models. Introduction to Forecasting. Mechanical Models Naïve Models Proportional Change Moving Averages Exponential Smoothing . Introduction to Forecasting.

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Introduction to Forecasting

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  1. Introduction to Forecasting Mechanical Models Time Series Analysis Barometric Models Econometric Models Technological Models

  2. Introduction to Forecasting Mechanical Models Naïve Models Proportional Change Moving Averages Exponential Smoothing

  3. Introduction to Forecasting Mechanical Models Naïve Models Yt+1 = Yt i.e., if Yt = 100 then Yt+1 = 100

  4. Introduction to Forecasting Mechanical Models Proportional Change Yt+1 = Yt* X Where X = some percentage change from the previous period i.e., if Yt = 100 and X = 10% then Yt+1 = (100)(10%) Yt+1 = 110

  5. Introduction to Forecasting Mechanical Models Moving Averages Yt+1 = (Yt+ Yt-1 + Yt-2 … Yt-n)/n Where n = the number of time periods to average i.e., n = 3 Yt-2 = 110 Yt-1 = 105 Yt = 100 Yt+1 = (100 + 105 + 110)/3 = 105

  6. Introduction to Forecasting Mechanical Models Exponential Smoothing Yt+1 = α (Yt) + (1-α ) (MA) Where α = Faith in most recent MA = Old Moving Average i.e., α = .7 MA = 105 Yt+1 = .7(100) + .3(110) Yt+1 = 70 + 33 = 103

  7. Introduction to Forecasting Time Series Trend Cycle Seasonal Noise

  8. Introduction to Forecasting Barometric Models Leading Indicators Lagging Indicators Coincident Indicators

  9. Introduction to Forecasting Barometric Models Leading Indicators Average Work Week - Production Workers, Manufacturing Average Weekly Initial Claims - State Unemployment Insurance Index of Net Business Formation New Orders - Durable Goods Industries Contracts and Orders - Plant and Equipment New Building Permits - Private Housing Change in Manufacturing and Trade Inventories Industrial Materials Prices Stock Prices - 500 Common Stocks Corporate Profits After Taxes Ratio of Price to Unit Labor Cost - Manufacturing Changes in Consumer Installment Debt

  10. Introduction to Forecasting Barometric Models Lagging Indicators Unemployment Rate - 15 Weeks and Over Business Expenditures Book Value - Manufacturing and Trade Inventories Labor Cost per Unit of Output Commercial and Industrial Loans Outstanding Bank Rates on Short Term Business Loans

  11. Introduction to Forecasting Barometric Models Coincidental Indicators Employees on Nonagricultural Payrolls Unemployment Rate - Total GNP in Current Dollars Industrial Production Personal Income Manufacturing and Trade Sales Sales of Retail Stores

  12. Introduction to Forecasting Mechanical Models Time Series Analysis Barometric Models Econometric Models Technological Models The Delphi Method

  13. The Delphi Method • An interactive forecasting method • Relies on a panel of experts • Experts answer provide predictions • A facilitator provides an anonymous summary of predictions with rationale behind them. • Experts revise answers after hearing replies of other members • This may go on for several rounds, with the range of predictions converging towards the “best" forecast.

  14. Introduction to Forecasting Mechanical Models Time Series Analysis Barometric Models Econometric Models Technological Models

  15. Introduction to Forecasting

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