Regression

t Y tY t2
෍ 𝑦 = 𝑛𝑎 + 𝑏 ෍ 𝑡
1 26 26 1

2 28 56 4 ෍ 𝑦𝑡 = 𝑎 ෍ 𝑡 + 𝑏 ෍ 𝑡 2
3 29 87 9
181=6a+21b
4 31 124 16 663=21a+91b
5 32 160 25

6 35 210 36

Sum=21 181 663 91

 Method 7: Trend-Adjusted Exponential
Smoothing (Holt’s model)
 The trend adjusted forecast consists of two components
❖ Smoothed error
❖ Trend factor

𝐹𝑡+1 = 𝐿𝑡 + 𝑇𝑡
𝐿𝑡 = 𝛼𝐷𝑡 + 1 − 𝛼 𝐿𝑡−1 + 𝑇𝑡−1
𝑇𝑡 = 𝛽 𝐿𝑡 − 𝐿𝑡−1 + 1 − 𝛽 𝑇𝑡−1

Alpha and beta are smoothing Period t Dt Lt Tt Ft

constants 1 26 24.27 1.69 ---
2 28
Trend-adjusted exponential smoothing 3 29
has the ability to respond to changes in 4 31
trend 5 32
6 35
7
Trend-Adjusted Exponential Smoothing
(Holt’s model)
Period t Dt Lt Tt Ft

1 26 24.27 1.69
2 28 26.36 1.81 25.95

3 29 28.34 1.86 28.17

4 31 30.36 1.91 30.19

5 32 32.21 1.89 32.26

6 35 34.28 1.94 34.10

7 36.23
Demand forecasting at Asian paints

 Asian paints found that in certain districts of Maharashtra

there is spike in demand for 50-100 ml packs of deep
orange shade during a specific period of year
Method 8: Data with seasonality
Sales Year 1 Year 2 Year 3 Year 4 Year 5 25000
Comparison between Demand & Forecast
JAN 2,000 3,000 2,000 5,000 5,000

FEB 3,000 4,000 5,000 4,000 2,000 20000

MAR 3,000 3,000 5,000 4,000 3,000

15000
APR 3,000 5,000 3,000 2,000 2,000

MAY 4,000 5,000 4,000 5,000 7,000

10000
JUN 6,000 8,000 6,000 7,000 6,000

JUL 7,000 3,000 7,000 10,000 8,000

5000
AUG 6,000 8,000 10,000 14,000 10,000

SEP 10,000 12,000 15,000 16,000 20,000

0
OCT 12,000 12,000 15,000 16,000 20,000 1 3 5 7 911131517192123252729313335373941434547495153555759616365676971

NOV 14,000 16,000 18,000 20,000 22,000

DEC 8,000 10,000 8,000 12,000 8,000

Total 78,000 89,000 98,000 1,15,000 1,13,000