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Forecasting. 5 June 2001. Introduction. What: Forecasting Techniques Where: Determine Trends Why: Make better decisions. What is Forecasting? . The art and science of predicting future events. Time Horizon. Short Range – 3 – 12 months Medium Range – 3 months – 3 years
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Forecasting 5 June 2001
Introduction • What: Forecasting Techniques • Where: Determine Trends • Why: Make better decisions
What is Forecasting? • The art and science of predicting future events
Time Horizon • Short Range – 3 – 12 months • Medium Range – 3 months – 3 years • Long Range – 3+ years
Qualitative Methods • Jury of Executive Opinion • Sales Force Composite • Delphi • Consumer Marketing Survey
Quantitative Methods • Time Series • Associative
Time Series Methods • Trend • Seasonality • Cycle • Random Variations
Demand in Previous n Periods MA n Moving Average Approach
Weighted Moving Average Σ(Weight for period n) (Demand in period n) WMA = ΣWeights
Exponential Smoothing • Ft= Ft-1 + (At-1 - Ft-1)
Exponential Smoothing With Trend Adjustment Ft = (At) + (1- )Ft-1 + Tt-1 Tt = (Ft - Ft-1) + (1- )Tt-1
Equation: Slope: Y-Intercept: Linear Trend Projection
Equation: Y-Intercept: Regression Analysis Slope: