Ministry of Higher Education and Scientific

Research University of Technology

Dep. of Production Engineering and Metallurgy
TECHNICAL REPORT 2019-2020

Branch: Industrial Engineering

Subject: Production planning

and control

FORECASTING TECHNIQUES
Quantitative Methods
‫احمد عبدالهادي ربيع‬: ‫اســـم الطالب‬
‫الهندسة الصناعية‬: ‫الفرع العلمي‬
‫ الثالــــثة\مســــائي‬:‫المـــــــــــرحلة‬
‫التوقيع‬ ‫اسم التدريسي‬ ‫درجة التقرير‬ Production :‫اســــــم المادة‬
‫كتابة‬ ‫رقما‬ planning and control

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INTRODUCTION
It is a statistical technique to make predictions about the future which uses numerical
measures and prior effects to predict future events. These techniques are based on
models of mathematics and in nature are mostly objective. They are highly dependent
on mathematical calculations.
Quantitative forecasting methods are very easy to predict based on the underlying
information. The data can be used to forecast automatically without many
complications. Any person can easily forecast on the basis of available data.
One of the main disadvantages of this method is its dependence on the data. The
entire forecasting depends on the data of the underlying model. An error in the
available data can lead to wrong forecasting. These methods can also be used only if
the proper data is available. This method cannot also evaluate the effect of changes in
the other variables involved.

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 types of quantitative forecasting methods:
1-Time-series models – These models examine the past data patterns and forecast the
future on the basis of underlying patterns that are obtained from those data. There are
many types of time series models like Simple and weighted moving average, seasonal
indexes, trend projections, simple mean and exponential smoothing.

2. Associative models – are also known as casual models. The model assumes that the
variable that is being forecasted is associated with other variables The predictions are
made based on these associations. The linear regression is one of the simplest forms
of an associative model of forecasting. This regression line forecasts the dependent
variable based on the selected value of the independent variable.

QUANTITATIVE FORECASTING APPROACHS

The various forecasting methods are quantitative data forecasting:

1- Naïve Approach.
2- Moving Averages.
3- Exponential Smoothing.
4- Trend Projection.
5- Linear Regressions.

Naïve Approach:
Demand of the current period is used as next period`s forecast.

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 Simple Moving Averages:
Stable demand with no pronounced behavioral patterns.

EXAMPLE

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 Weighted moving average
Weights are assigned to most recent data.

EXAMPLE

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 Potential problems with Moving Average
1- Increasing n smooths the forecast but makes it less sensitive to changes.
2- Do not forecast trends well.
3- Require extensive historical data.

Exponential Smoothing
1-From of weighted moving average
a- Weights decline exponentially.
b- Most recent data weighted most.

2-Requries smoothing constant(α)

a- Range from 0 to 1.
b- Subjectively chosen.

3-Involves little record keeping of past data.

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EXAMPLE

Common Measures of Error

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Characteristics of Quantitative Methods

Based on mathematics; Quantitative in nature.

Strengths of Quantitative Methods

Consistent and objective; able to consider much information and data at one time.

Weaknesses of Quantitative Methods

Often quantitative data are not available. Only as good as the data on which they are
based.

When to use Quantitative Approach?

1- When situation is stable.
2- When historical data exist.

What is the Skills required?

Require (econometric/ mathematical/ techniques)

Nature of Quantitative Methods

It depends on the statistic/ data.

Major techniques of Quantitative Methods

1- Simple regressions.
2- Multiple regressions.
3- Moving averages.
4- Univariate method.

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References

https://www.clickz.com/forecasting-techniques-part-1-quantitative-methods/
https://mech.at.ua/Forecasting.pdf
https://slideplayer.com/slide/9797649/