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Supplement Chapter 6: Forecasting

This document discusses different approaches to forecasting, including qualitative and quantitative methods. Qualitative methods involve collecting judgements and opinions from experts, while quantitative methods examine past time series data to identify trends and patterns in order to forecast future values. Specific quantitative techniques mentioned include moving average forecasting, which takes the average demand over previous periods, and exponential smoothing, which weights recent periods more heavily than older data. The document notes that while forecasting models are widely used, their performance can be imperfect, and long-term forecasting may be better served by causal models.

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April Mae Celerinos Montes
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53 views

Supplement Chapter 6: Forecasting

This document discusses different approaches to forecasting, including qualitative and quantitative methods. Qualitative methods involve collecting judgements and opinions from experts, while quantitative methods examine past time series data to identify trends and patterns in order to forecast future values. Specific quantitative techniques mentioned include moving average forecasting, which takes the average demand over previous periods, and exponential smoothing, which weights recent periods more heavily than older data. The document notes that while forecasting models are widely used, their performance can be imperfect, and long-term forecasting may be better served by causal models.

Uploaded by

April Mae Celerinos Montes
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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SUPPLEMENT CHAPTER

FORECASTING
Forecast
- a statement about the future value of
a variable of interest such as demand.
- predictions about the future
One key step in forecasting – is to
know the possible option and the lead
times required to bring them about
Casual Modelling is an approach
which describes and evaluates
the complex cost effect
relationships between the key
variables.
2 APPROACHES TO
FORECASTING

Qualitative methods
- involves collecting and appraising
judgements, options, even best guesses
from experts to make a prediction as
well as past performance.
3 ways that can be done in a
qualitative method:

1. Panel Approach
2. Delphi Method
3. Scenario Planning
QUANTITATIVE METHODS
Time series examine the patterns of
past behaviour of a single
phenomenon over time, taking into
account reasons for variation in the
trend in order to use the analysis to
forecast the phenomenon’s future
bahaviour.
Forecasting Unassignable Variations

Moving-average forecasting takes the


previous n periods’ actual demand
figures, calculates the average
demand over the n periods, and uses
these average as a forecast for the
next periods’ demands.
Exponential Smoothing - forecasts the
demand in the next period by taking
into account the actual demand in the
current period and the forecasts
which was previously made for the
current period
Forecasting models are widely used
in management decision making, and
indeed most decisions require a
forecast of some kind, yet the
performance of the type of model is
far from impressive.
Long-term forecasting methods,
although difficult to judge because
of the time lapse between forecast
and the event, do seem to be more
amenable to an objective causal
approach.

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