Steps in Forecast

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Calculating Error in Forecast

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teps in Forecast
Calculate Average of Actual historical demand
Calculate Seasonal Effect Divide actual demand by average
Calculate Quarterly Index by averaging similar quarter data
List Index of each quarter back in the table
De-seasonalize the data by dividing actual demand by Index
Copy the values of De-seasonalized data to a new range
Extend Deseasonalized values to obtain forecast for the following 8 quarters
Obtain Seasonalized Forecast by multiplying forecast by seasonal index

alculating Error in Forecast

Input actual demand for the following 8 quarter
Find the error in forecast by subtracting forecast from actual demand
Calculate Absolute Error per quarter
Calculate Mean Absolute Deviation (MAD)
Calculate Standard Deviation per quarter (1.25*MAD)
Calculate Average Error by calculating square root of sum on the variance of all

The error per quarter can be used to improve future forecast

Standard deviation is used to estimate uncertainty per quarter

Please note that there is not any smoothing technique used in this example
 Cells
S1
E2:E17
N3:S6
F2:F17
G2:G17
H2:H17
H18:H25
I18:I25

J18:J25
K18:K25
M18:M25
M26
M28
K27
 Actual Seasonal Forecast of Seasonalized Actual Forecast
Year Quarter Period Demad Effect Index Deseasonalized Trend Trend Forecast Demand Error MAD
1 1 1 27,832
1 2 2 39,734
1 3 3 36,542
1 4 4 54,938
2 1 5 32,698
2 2 6 47,174
2 3 7 45,612
2 4 8 63,148
3 1 37,451
3 2 53,089
3 3 46,545
3 4 74,019
Forecast Error for 1 Year
Average of Actual Demand Standard Deviation Per Quarter
Qrtr/Year Year 1 Year 2 Index
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