Quantitative forecasting

methods in library
management

Prof. Dr. Algirdas Budrevicius

Vilnius University, Faculty of
Communication
Course website: http://www.kf.vu.lt/~albud/progn/Engl
"If you can look into the seeds of time,
and say which grain will grow and
which will not, speak then unto me. "
--William Shakespeare

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• "It is far better to foresee even
without certainty than not to foresee
at all. "
• --Henri Poincare in The Foundations
of Science, page 129.

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 Course plan

• Lecture 1. Forecasting: history and current

situation. Forecasting in management.
Qualitative and quantitative forecasting.
Time series forecasting. Visual data pattern
analysis. Forecasting in library
management. Naive forecasting methods.

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 Course plan (continued)

• Lecture 2. Part 1: Moving average forecasting

method. Errors of forecast. Part 2: Practical work
with Excel
• Lecture 3. Part 1: Forecasting using linear
regression. Trend analysis. Part 2: Practical work
with Excel
• Lecture 4-5. Forecasting project: analysis of
forecasting situations in libraries; examples.
Practical work with Excel
• Lecture 6. Discussions
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 Course materials
• Course description: Website
http://www.kf.vu.lt/~albud/progn/Engl
• Lectures: PowerPoint presentations
• Data, demonstrations, task solutions: Excel
workbooks

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 Development of the forecasting
technique
• Non scientiffic forecasting: e.g. Astrology,
Book of Changes.
• 19-20 century. Demographic forecasts
• Development of the quantitative methods:
middle-to-second part of the 20th century.
• New developments: Neural network based
methods
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 Current situation in forecasting
• Forecasting is widely used in management now
• There exist a well defined set of quantitative
forecasting methods that changes very little during
last fiew decades
• There exists computer software that may be quite
simply applied in forecasting
• Excel program allows to solve simple forecasting
tasks

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 Forecasting in management
Forecasting is used
in various domains of management, such as:

• Personnel management
• Resource management
• Finance management
• Organizational management

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 Taxonomy of forecasting
methods
• Methods: quantitative and qualitative
• Qualitative: judgmental (based on expert
opinions) and technological (used for long
term forecasts)
• Quantitative: time series methods and
reasoning
• Note: only time series methods will be
considered in this course.
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 Definition of a forecasting
situation
• Data (time series, or historical data)
• Forecasting method (e.g. Moving average,
Trend analysis)
• Forecast
• Error of forecast

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Quantitative time series based
forecasting
 Naive forecasts NF1 and NF2
• Naive forecasts: (a “folk forecasting technique”)
• NF1. (“The value tomorow will be the same as
today”). Example: Number of library visitors
today was 120. Forecast NF1 for tomorow: 120.
• NF2. (“The value tomorow will be less (greater)
by …10% ”). Example: Average temperature this
month is 20 degrees. Forecast NF2 for the next
month: Temperature will be 25 degrees (increase
of 25%).
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 Time-series methods of forecasting

• Time series analysis relies on historical data

and attempts to project historical patterns
into the future
• Note: only time series methods will further
be considered

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 Time-series example
Number of visitors in a
library (in th.)

Year 1998 1999 2000 2001 2002 2003

Numb 420 450 440 460 470 465

er

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Recomended form to present data
and forecasts: an example

Year Number of readers Forecast Error

1995
1996
...
2005
(forecast)

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 Example of real time series data
concerning libraries
• Number of libraries (network)
• Document stocks
• Loan of documents
• Number of users
• Number of visitors, etc. (also see examples in
Excell worksheets)

Conclusion: good possibilities to

apply forecasting methods,
based on time series analysis
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 Example of data
Nework of Municipal Public Libraries in Lithuania in 1991-2002

Year Number of libraries

1991 1662
1992 1569 Municipal public libraries in Lithuania in
1991-2002
1993 1521
1994 1514 1700

Number of
1995 1506

libraries
1600
1500
1996 1484 1400
1997 1473 1300
1998 1459

1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
1999 1447 Year
2000 1448
2001 1427
2002 1400

Source: Statistics of Lithuanian Libraries.

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 Example of forecasting
Forecasting using linear trend. Demonstration
1. Calculating correlation: 0,995741
Week Number of library visitors Signifficant correlation
1 1063 2. Plotting a chart (XY scatter)
2 2369 3. Adding a linear trend line
3 3159 Options: display equation
4 3964 4. Calculating the forecast
5 5001 (by inserting number of the week x=6 into the equation)
6 5. Evaluation (using RSQ) 0,99
Very good fitting
Number of library visitors

8000
6000 y = 947,1x + 269,9
Visitors

2
4000 R = 0,9915

2000
0
0 1 2 3 4 5
Week

Forecasted number of visitors: 5953

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 Patterns of the time-series data

A forecasting method should comply with the data pattern.

There are 4 basic data patterns:

• Horizontal (random, irregular variation)

• Trend (linear)
• Periodical (cyclical, seasonal)
• Complex (a combination of part or all listed
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Horizontal pattern
Horizontal (irregular variations)

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 Trend
Trend (close to the linear growth)

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Periodical pattern
Periodical seasonal

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 Complex pattern
Complex data pattern including random,
trend and periodical variations

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Measuring forecast accuracy

What is the accuracy of a particular

forecast?
How to measure the suitability of a
particular forecasting method for a
given data set?
 Definition of the forecast error
• Error (e) of a forecast is measured as a
difference between the actual (A) and
forecasted values (F), that is,
• e=A-F,
• or, in a relative form: e=100% (A-F)/A.
• The error can be determined only when
actual (future) data are available.
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Standard statistical measures to
estimate errors (1)
•To preliminary evaluate a forecast and
suitability of a method, various statistical
measures may be used. In evaluating forecasts
obtained by means of the moving average
method, the following measures may be used:

• Mean (average) error (ME)

• Mean absolute error (MAE)
• Mean squared error (MSE)
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 Standard statistical measures to
estimate errors (2 - relative)

• Mean percentage error (MPE)

• Mean absolute percentage error (MAPE)

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Statistical measures of goodness
of fit
In trend analysis the following
measures will be used:

• The Correlation Coefficient

• The Determination Coefficient

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 The Correlation Coefficient
• The correlation coefficient, R, measure the
strength and direction of linear relationships
between two variables. It has a value
between –1 and +1
• A correlation near zero indicates little linear
relationship, and a correlation near one
indicates a strong linear relationship
between the two variables
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The Coefficient of Determination
• The coefficient of determination, R2,
measures the percentage of variaion in the
dependent variable that is explained by the
regression or trend line. It has a value
between zero and one, with a high value
indicating a good fit.

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End