• • • • • Forecasting Steps – ID what to forecast – ID what data is available – Select and test a forecasting model – Generate forecast – Monitor forecast accuracy over time Qualitative Forecasting Methods – Executive opinion – Market Research (uses surveys to ID preferences) – Delphi Method (consensus among experts) Quantitative Forecasting Methods – Time Series • Naïve • Simple Mean • Simple Moving Average • Weighted Moving Average • Exponential Smoothing: aA+(1a)F • Linear Trend Line (Linear Regression) • Ybar=a+bXbar • b=∑XY – nXbarYbar/∑X2 – nXbar2 • slope = b • intercept = a • forecast = Ybar • Seasonal Indexes (Decomposition Method) • F= (a +bt) x Seasonal Index • Trend component = a + bt – Causal Models • Linear Regression • Multiple Regression Measures of Forecast Error – Actual – Forecast – MSE: ∑(actual – forecast)2/n lower is better – MAD: ∑|actual - forecast|/n lower is better – Tracking Signal: ∑(actual...