Chapter 7

My interest is in the future because I am

going to spend the rest of my life there.—
Charles F. Kettering

Forecasting

1
 Time-Series Analysis
A time series is numerical sequence of
values generated over regular time intervals.
The classical time-series model involves
four components:
Secular trend (Tt).
Cyclical movement (Ct).
Seasonal fluctuation (St).
Irregular variation (It).
The multiplicative model determine the
level of the forecast variable Yt:
2
Yt = Tt × Ct × St × It
 Classical Time-Series Model

3
 Exponential Smoothing
 Finding the components is difficult.
 A direct approach averages past Yt
values by exponential smoothing.
 The forecast value is computed from
Ft+1 = Yt + (1)Ft
 The above involves a single parameter, the
smoothing constant  alpha.
 All previous time periods are reflected in
the Fs, and greater weight is given to the
4 more recent.
 Forecasts with Single-Parameter
Exponential Smoothing

5
 Single-Parameter Forecasts
 The preceding slide shows single-parameter forecasts
of Blitz Beer sales. These were generated by
computer.
 The level for  was .20. A greater  will assign more
weight to the present.
 Quality of forecasts may be measured. Most common
is the mean squared error:

(Yt – Ft)2
MSE =
n forecasts made.
which averages errors over all
 Other measures are the mean absolute deviation
(MAD) and mean absolute percent error (MAPE).
6
 Two-Parameter Exponential
Smoothing
 The smoothing constant can be tuned to the
past, possibly providing better forecasts.
 But single-parameter forecasts may still lead
or lag actuals, as seen for Blitz Beer,
because the impact of trends is delayed.
 Trend Tt can be incorporated with a second
trend smoothing constant  (gamma):
Tt = Yt + (1 – )(Tt –1 + bt –1)
bt = (Tt – Tt –1) + (1 – )bt –1
Ft+1 = Tt + bt
7  That greatly reduces Blitz Beer’s MSE.
 Forecasts with Two-Parameters

8
 Seasonal Exponential Smoothing
with Three Parameters
 Many time series have regular seasonal
patterns to be incorporated into forecasts.
 The three-parameter model incorporates a
seasonal smoothing constant  (beta):
Tt = Yt /St –p) + (1 – )(Tt –1 + bt –1)
bt = (Tt – Tt –1) + (1 – )bt –1
St = Yt /Tt) + (1 – )St –p

9
Ft+1 = (Tt + bt) St –p+1
 Forecasting with
Three Parameters

10
 Forecasting with
Three Parameters
 The above works for p = 4 quarters or p =
12 months.
 The preceding slide needs 6 quarters to
generate the first (very bad) forecast.
 The process settles quickly, providing good
forecasts p periods into the future.

11
 Forecasting Trend Using
Regression
 To forecast years in advance, regression
analysis provides a trend line.
Ŷ(X) = a + bX
 The independent variable X is years beyond
the base period, the forecast or dependent
variable is Y.
 The regression coefficients a (intercept)
and b (slope) are found (with the computer)
by applying the least squares method.
12  The following applies to toothpaste sales Y.
 Forecasting Trend Using
Regression

13
 Regression in Causal Models
 Regression analysis can make forecasts
with with a non-time independent variable.
 A simple regression employs a straight line.
Ŷ(X) = a + bX
 The dependent variable is not time periods,
such as:
 store size
 order amount
 weight
 For 10 rail shipments, the transportation
14
time Y was forecast for specific distance X.
 Forecasting Transportation Time
from Distance

15
 Multiple Regression in
Forecasting
 Regression fits data employing a multiple
regression equation with several predictors:
Ŷ = a + b1X1 + b2X2
 Floorspace X1 and advertising expense X2
make forecasts of hardware outlet sales Y:
Ŷ = 22,979 + 11.42X1 + 23.41X2
 The above was obtained in a computer run
using 10 data points.
 Forecast with X1 =2,500 sq.ft. and X2=$750:
16
Ŷ = 22,979+11.42(2,500)+23.41(750)=$23,129
 Forecasting Using Seasonal
Indexes
 The classical time-series model provides a
rationale for isolating seasonal components:
Yt Tt × Ct × St × It
= = St × It
Moving average Tt × Ct
 The procedure is the ratio-to-moving-
average method:
 (1) Compute moving averages from Ys.
 (2) Center above.
 (3) Express Ys as % of moving average.
 (4) Determine medians by season and adjust.
17
 Above (done on computer) leaves only St .
 Excel Forecasting
Templates and Tools
 Single-parameter exponential smoothing
 Two-parameter exponential smoothing
 Three-parameter exponential smoothing
 Regression
 Classical time series analysis

18
 Exponential Smoothing Tool
Single-parameter exponential smoothing is
easy with Excel’s ToolPak. Click on Tools
on the menu bar, select the Data Analysis
option, and then in the Data Analysis dialog
box, click on Exponential Smoothing.

19
 Single-Parameter
Exponential Smoothing (Figure 7-4 )
1.1. Enter
Enterthe
the A B C D E F
smoothing
smoothing
1 Forecast of Blitz Beer Sales by Single-Parameter Smoothing 2.2. Enter
Enter
2  = 0.2
constant
constantin inD2.
D2. 3 problem
problem
4 Period Actual Forecast information
informationin in
5 Month t Sales, Yt Sales, F t
3.3.IfIfmore B6:D25. Notice
morethanthan 6 January 2000 1 4,890 B6:D25. Notice
20 D26
D26does
doesnot
20periods
periodsof
7 February 2 4,910 4890.0
of 8 March 3 4,970 4894.0
not
data are have a value
have a value
data are 9 April 4 5,010 4909.2
available, 10 May 5 5,060 4929.4 because
becauseititisisto
to
available, 11 June 6 5,100 4955.5
expand be forecast.
expandcolumns
columns 12 July 7 5,050 4984.4 be forecast.
B,
B, C, andDDto
C, and to
13 August 8 5,170 4997.5
14 September 9 5,180 5032.0
include
includeall allthe
the 15 October 10 5,240 5061.6
data by inserting 16 November 11 5,220 5097.3
4.4. Click
data by inserting 17 December 12 5,280 5121.8 Clickon
onTool,
Tool,
rows.
rows. ThenThen 18 January 2001 13 5,330 5153.5 Data Analysis,
Data Analysis,
copy
copy theformula
the 19 February 14 5,380 5188.8
and
formula 20 March 15 5,440 5227.0 andthe the
in
in E26 downto
E26 down to 21 April 16 5,460 5269.6 Exponential
22 May 17 5,520 5307.7 Exponential
all
allthethecells
cellsin Smoothing
in 23 June 18 5,490 5350.2 Smoothingto to
the expanded
the expanded 24 July 19 5,550 5378.1 get the
25 August 20 5,600 5412.5 get the
table.
table. Exponential
26 September 21 5450.0 Exponential
27 Smoothing
Smoothing
28 MSE = 24,254
29
D
dialog
dialogboxbox
30
31
28 =SUMXMY2(D7:D25,E7:E25)/COUNT(E7:E25) shown
shownnext.next.
20
 Exponential Smoothing Dialog Box
(Figure 7-5)
4.4. Click
Clickthe
theOK
OKbutton
buttontotoget
getthe
theresults
results
shown
shownpreviously
previouslyin
inFigure
Figure7-4.
7-4.

1.1.In
Inthe
the Input
Input
Range
Rangelinelineenter
enter
the
the range ofthe
range of the
data. The result
data. The result
shown
shownisis
$D$6:$D$25
$D$6:$D$25

2.2. Enter
Enterthe the
Damping
Dampingfactor. factor.
ItItisis11- -


3.3. In
Inthe
theOutput
Output
Range
Rangeenterenterthe
the
location of the
location of the
results.
results.

21
 1.1. Enter
Enterthe
smoothing
smoothing
the Two-Parameter Exponential
Smoothing (Figure 7-6)
constants
constantsin inC2
C2
and E2.
and E2.
A B C D E F
1 Forecast of Blitz Beer Sales by Two-Parameter Smoothing
2  = 0.20  = 0.30 3.3.IfIfmore
morethanthan
2.2. Enter 3 20
20 periodsof
periods of
Enter 4 Period Actual Trend Trend Forecast
problem 5 Month t Sales, Yt Tt Slope, bt Sales, Ft data
data areare
problem
information available,
informationin
6 January 2000 1 4,890
in 7 February 2 4,910 4,890 20.0 available,
A6:C25. Notice expand
expand
A6:C25. Notice 8 March 3 4,970 4,922 23.6 4,910.0
C26:E25 9 April 4 5,010 4,958 27.5 4,945.6 columns
columnsA, A,B,
C26:E25do donot
not 10 May 5 5,060 5,001 31.9 4,985.9 B,
have values 11 June 6 5,100 5,046 35.9 5,032.7 and C
and C to to
have values
because 12 July 7 5,050 5,076 34.0 5,082.1 include
includeall allthe
becausetheythey 13 August 8 5,170 5,122 37.6 5,109.7 the
correspond data
databy
correspondto by
14 September 9 5,180 5,164 38.9 5,159.4
to 15 October 10 5,240 5,210 41.1 5,202.4
the period for inserting
insertingrows. rows.
the period for 16 November 11 5,220 5,245 39.3 5,251.0
which Copy the
whichthe
17 December 12 5,280 5,283 39.0 5,284.1
the 18 January 2001 13 5,330 5,324 39.5 5,322.3
Copy the
forecast formulas
formulasin
forecastisisbeing
being 19 February 14 5,380 5,367 40.5 5,363.3 in
made. 20 March 15 5,440 5,414 42.5 5,407.2 D25:E25
D25:E25 down down
made. 21 April 16 5,460 5,457 42.7 5,456.2
22 May 17 5,520 5,504 43.9 5,499.6 to
tothethenext
nexttoto
23 June 18 5,490 5,536 40.5 5,547.6 last row in
last row in the the
24 July 19 5,550 5,571 38.9 5,576.5
25 August 20 5,600 5,608 38.3 5,610.1 expanded
expanded
26
27
September 21 5,646.3 table.
table. Finally,
Finally,
28 MSE = 1,734.64 copy
copy F26down
F26 down
29
30
D E F to
toallallthe
therows
rows
7 =C6 =C7-C6
31
8 =$C$2*C8+(1-$C$2)*(D7+E7) =$E$2*(D8-D7)+(1-$E$2)*E7 =D7+E7
in the
in the
22 32
33
9 =$C$2*C9+(1-$C$2)*(D8+E8) =$E$2*(D9-D8)+(1-$E$2)*E8 =D8+E8 expanded
expanded
 Finding the Best Smoothing
Parameters with Solver (Figure 7-7)
NOTE:
NOTE: Normally
Normallyall
allthese
theseentries
entriesappear
appearininthe
theSolver
SolverParameter
Parameterdialog
dialog
2.2.To box
boxso
soyou
youonly
onlyneed
needto toclick
clickon onthe
theSolve
Solvebutton.
button. However,
However,you
youshould
should
To
minimize always
alwayscheck
checkto
tomake
makesuresurethetheentries
entriesare
arecorrect
correctfor
forthe
theproblem
problem you
you
minimize
are solving. 1.1.The
the
theMSE,
MSE, are solving. The location
locationofofthe
theMSE
MSEisis
Min is in
inthe
theSet
SetTarget
TargetCell
Cellline.
line.
Min is
selected
selectedin in
the Equal 6.6. Click
Clickthe
the
the Equal Solve button
To
Toline.
line. Solve button
to
toget
getFigure
Figure
7-6,
7-6,shown
shown
3.3. The 4.4. In
Inthe
the previously.
The previously.
Changing Subject
Subjectto to
Changing
Cells the
Cellsline
line the
has the Constraints
Constraints
has the
location box
boxthe thetwo
locationof of two
the two smoothing
smoothing 5.5. Click
Clickthe
the
the two
smoothing parameters
parameters Options
Optionsbutton
button
smoothing
parameters. are
are to verify that
to verify that
parameters.
restricted
restrictedto to nonnegative
nonnegative
being
beingequal
equal smoothing
smoothing
to
toor orless
less parameters
parameters are are
23
than one.
than one. specified.
specified.
 The Add Constraint Dialog Box
(Figure 7-8)

The Add Constraint dialog box is used to

Normally,
specify the constraints on the variable in the
Normally,all all
these
theseentries
already
entries Changing Cells line. Enter a smoothing
alreadyappear.
appear.
You
You will needto
will need to parameter such as C2 in the Cell Reference
use this dialog
use this dialog
box
boxonly
onlyififyou
you
line. Select a sign by clicking on the down
need
needtotoadd
addaa
constraint.
arrow in the middle, and then enter the
constraint.
right-hand side in the Constraint line (1
IfIfyou
youneed
needto to
change
change a a here). Click OK when finished.
constraint,
constraint,the
the
Change
Change
Constraint
Constraint
dialog
dialogbox
box
functions
functionsjust
just
like this one.
like this one.
24
1.1. Enter
Enterthe
Three-Parameter Exponential
the
smoothing
smoothing
constants
constantsin inC2,
C2,

Smoothing (Figure 7-11)

E2, and G2.
E2, and G2.

2.2. Enter
Enter A B C D E F G
problem
problem 1 Seasonal Exponential Smoothing Results for Stationer's Supply A B C D
14. Finally,
4.Seasonal
Finally, copy
copythe
Exponential thefour fourResu
Smoothing
information
informationin
in
2  = 0.4 = 0.5  = 0.7
3 2
forecasting formulas in
 = 0.4
3 forecasting formulas in
= 0.5
A6:C33.
A6:C33. 4 Actual Trend Slope Seasonal Forecast
4G34:G37 toActual
5 Quarter t Sales, Yt Tt bt St Ft
G34:G37 tothe
5 Quarter t Sales, Y
thelast
last four S
Trend
T four
3.3.IfIfless rows of the90,640
expanded
t t

lessorormore
6 1994 W 1 90,640
more 7 1988 S 2 115,540 90,640.00 24,900.00 1.27 6 rows
1994 W of1 the expanded
than 7table
1988 S(the2 last year).
than77yearsyearsof
115,540 90,640.00 24,9
of 8
9
1988 S
1988 F
3
4
99,190
128,800
109,000.00
129,898.00
21,630.00
21,264.00
0.91
0.99
table (the
8 1988 S 3
last
99,190
year).
109,000.00 21,6
data
data areare 10 1995 W 5 102,350 131,637.20 11,501.60 0.78 9Make
1988 F sure
Make sure
4 that
thatthese
128,800 these
129,898.00 21,2
available, 11 1988 S 6 127,440 125,873.45 2,868.93 1.09 182,460.91 formulas
10 1995 W
11formulas
5 refer
102,350
6 refer
back
127,440 back
to
131,637.20
to 2,8
11,5
available, 12 1988 S 7 112,530 126,709.16 1,852.32 0.89 117,155.57 1988 S 125,873.45
shorten last
1988row
row78 of data. InInthis
shortenor 12 S
or 13
14
1988 F
1996 W
8
9
145,080
110,490
135,663.60
141,482.77
5,403.38
5,611.27
1.05
0.78
127,474.78
109,681.80
last
13 1988 F
of112,530
data. 126,709.16
145,080
this 1,8
135,663.60 5,4
expand spreadsheet the
expandcolumnscolumns 15 1988 S 10 143,000 140,679.34 2,403.92 1.04 160,498.09 14spreadsheet the
1996 W 9 110,490 141,482.77 5,6
A, forecasting formulas in
A,B, B,and
andCCto
16 1988 S 11 119,700 139,367.04 545.81 0.87 128,011.99 15 1988 S 10 143,000 140,679.34 2,4
to 17 1988 F 12 157,760 144,273.63 2,726.20 1.08 146,355.98 16forecasting
1988 S 11 119,700 formulas
139,367.04in 5
include all the 30 2000 W 25 157,500 189,364.54 3,818.46 0.83 153,529.94 cells
17 1988 FG34:G37
cells 12 157,760refer
G34:G37 refer back
back 2,7
144,273.63
include all the 18 1997 W 13 123,710 151,647.84 5,0
data 31 1988 S 26 192,240 193,811.82 4,132.87 0.99 190,688.25
to1988
row 3333which
whichcontains
databy bydeleting
deleting 32 1988 S 27 168,330 197,257.56 3,789.30 0.85 169,803.61 19to row
S 14 153,360 contains3,2
153,066.75
or inserting 33 1988 F 28 218,960 200,406.97 3,469.36 1.09 220,716.23 the
20 1988data
S 15for the
thefall
131,950 of
154,474.07 2,3
or inserting 34 2001 W 29 168,800.51 21the
1988 data
F 16 for
173,160 fall of
158,254.92 3,0
rows. 2000, the last period.
rows. Copy Copythe
F G
the 35 1988 S 30 11 =$G$ 2*(C 11/ D11)+(1-$ G$2)* F7 =(D1 0+E 10)*F7
205,365.30 222000, the last period.
1998 W 17 135,900 164,310.21 4,5
formulas in 36 1988 S 31 12 =$G$ 2*(C 12/ D12)+(1-$ G$2)* F8 =(D1 1+E 11)*F8 180,182.79
Thus,
24Thus,
if19the
23 1988 S 18 164,780
1988 S if the four 166,383.71
four 169,823.32 3,3
3,3
formulas in 37 1988 F 32 13 =$G$ 2*(C 13/ D13)+(1-$ G$2)* F9 =(D1 2+E 12)*F9 234,460.18 146,010
D33:G33
D33:G33down down
38 forecasting
25 1988 F formulas
20 190,400
forecasting in
173,810.42
formulas in 3,6
39 MSE = 182,250,569 26 1999 W 21 145,070 177,220.62 3,5
through the expanded table are in
through thelast
the last 40 D E F 27the expanded table are in2,6
1988 S 22 175,960 179,044.78
quarter of
quarter of the the 41
42
7
8
=C 6
=$C$2*C8+(1-$C$2)*(D 7+E7)
=C 7-C 6
=$E$2 *(D 8-D 7 )+(1-$ E$2)*E7
=C 7/D 7
=C 8/D 8 G44:G47
28 1988 S 23 then
29G44:G47
1988 F
155,480
24 then
they
202,960 they
181,397.24
184,576.76
2,5
2,8
next
9 =$C$2*C9+(1-$C$2)*(D 8+E8) =$E$2 *(D 9-D 8 )+(1-$ E$2)*E8 =C 9/D 9
should refer back to row
nextto tolast
lastyear
43 30 2000 W 25 157,500 189,364.54
year 44
10 =$C $2*C 10+(1-$C$ 2)*(D 9 +E9 ) = $E$2 *(D10-D 9)+(1-$E$ 2)*E9 =C10/D 10 should refer back
31 1988 S 26 192,240
to row 3,8
193,811.82 4,1
in the expanded
in the expanded 45
D
11 =$C$2*(C11 /F 7)+(1-$C$2)*(D10+E 10)
E 43,
3243, the
1988 S last
the last
27 row
rowof
168,330 of data.
data. 3,7
197,257.56
25 = SUM XMY2(C11:C33,G11:G 33)
table.
table.
46
47
12 =$C$2*(C12 /F 8)+(1-$C$2)*(D11+E 11)
13 =$C$2*(C13 /F 9)+(1-$C$2)*(D12+E 12)
39 /COUNT(G11:G 33)
33 1988 F
34 2001 W
28
29
218,960 200,406.97 3,4
 Regression
Regression is easy with Excel’s Regression
Tool. Click on Tools on the menu bar, select
the Data Analysis option, and then in the Data
Analysis dialog box select Regression. This
yields the Regression dialog box shown next.

26
 1.1. In
Inthe
the Input
InputYY 3.3. Click
Clickon
onthe
the
Range
Rangeline lineenter
enterthe OK
OK button toget
button to
range of the Y
the
data.
range of the Y data. Regression Dialog Box the Regression
the Regression
get

The
Theresult
resultshown
shown (Figure 7-18) Summary
SummaryOutput
Output
here
hereisis$C$7:$C$16
$C$7:$C$16 shown
shownnext.next.

2.2.In
Inthe
the Input
InputXX
Range
Rangeline lineenter
enter
the
the range ofthe
range of the
XXdata. The
data. The
result
resulthere
here
shown
shownisis
$B$7:$B$16
$B$7:$B$16

27
 Excel’s Regression Tool
(Figure 7-16)
The slope and intercept are read from E15:E16 and
yield the regression equation below. The multiple R,
R squared, adjusted R, standard error, and F and t
statistics are shown also.
A B C D E F G
1 Fitting Trend Line to BriDent Toothpaste Sales Using Regression
2 SUMMARY OUTPUT
3 Year in Unit
4 Transformed Sales Regression Stat ist ics
Multiple R 0.98
5 Units (thousands)
R Square 0.96
6 Year X Y Adjusted R Square 0.96
7 1992 0 72.9 Standard Er ror 0.90
8 1993 1 74.4 Observat ions 10

9 1994 2 75.9 ANO VA

10 1995 3 77.9 df SS MS F S ignificance F
11 1996 4 78.6 Regr ession 1 177.47 177.47 219.86 0.00
12 1997 5 79.1 Resi dual 8 6.46 0.81
Tot al 9 183.92
13 1998 6 81.7
14 1999 7 84.4 C oeff icients St andard Er ror t Stat
15 2000 8 85.9 I nter cept 72.96 0.53 138.17
16 2001 9
 84.8 X 1.47 0.10 14.83

28
Y  72..96  1.47 X
 Multiple Regression
(Figure 7-21)
A B C D E F G
1 Multiple Regression for the Deuce Hardware Store
2 Excel’s
Excel’s
3 Monthly
4 Monthly Floorspace Advertising regression
regressiontool
tool
5
6 Store
Sales
Y
(square feet)
X1
Expenditure
X2
can
can be usedto
be used to
7 1 20,100 3,050 350 do multiple
do multiple
8 2 14,900 1,300 980
9 3 16,800 1,890 830 regression.
regression. Just
Just
10
11
4
5
9,100
15,500
1,750
1,010
760
930
list ALL the X
list ALL the X
12 6 26,700 2,690 770 variables
variableswhen
when
13 7 34,600 4,210 440
14 8 7,200 1,950 570 designating
designatingthethe
15 9 21,800 2,830 310
16 10 23,400 2,030 920 Input X Range;
Input X Range;
17
18 SUMMARY OUTPUT
C7:D16
C7:D16in inthis
this
19 example.
example.
20 Regression Statistics
21 Multiple R 0.89332611
22 R Square 0.798031538 
23
24
25
Adjusted R Square
0.740326264
Standard Error 4168.371133
Observations 10
Y  22,979  11 .42 X 1  23.41X 2
26
27 ANOVA
28 df SS MS F Significance F
29 Regression 2 480581774.7 240290887.3 13.8294383 0.003702478
30 Residual 7 121627225.3 17375317.9
31 Total 9 602209000
32
33 Coefficients Standard Error t Stat P-value Lower 95% Upper 95%
34 Intercept -22979 10546.50 -2.18 0.07 -47917.10 1959.87
35 X1 11.42 2.29 4.98 0.00 5.99 16.84
29 36 X2 23.41 8.64 2.71 0.03 2.99 43.84
1.1.Enter
Enterproblem
problem
Classical Time Series
information
informationininA19:C46.
2.2.IfIfmore
morethan
A19:C46.

than77years
years
Analysis (Figure 7-22) 3.3.(cont’d)
of data are available, A B C D E F G H (cont’d)
of data are available, 1 CLASSICAL TIME SERIES ANALYSIS Copy
Copythe the
expand
expandcolumns columnsA, A,B,
C
formula
formulain inH44
2
B, 3 PROBLEM: Stationer's Supply 6 = MEDIAN(F23,F27,F31,F35,F39,F43)
H44
and
andCCto toinclude
includeall allthe
the 4
7 = MEDIAN(F24,F28,F32,F36,F40,F44)
down through
data
5 Quarter Ratio Index
8 = MEDIAN(F21,F25,F29,F33,F37,F41)
down through
databy byinserting
insertingrows.
9 = MEDIAN(F22,F26,F30,F34,F38,F42)
rows. 6
7
Winter
Spring
88.15% 88.18%
105.92% 105.95%
D H the
theendendof ofthe
the
Copy
Copy the formulasin
the formulas 6 =C6*4/SUM($C$6:$C$9)
data
datain inthe
19 =C19/G19
in 8 Summer 90.43% 90.46% 7 =C7*4/SUM($C$6:$C$9) 20 =C20/G20 the
D44:F44 down
D44:F44 down through through 9
10
Fall 115.36% 115.40% 8 =C8*4/SUM($C$6:$C$9) 21 =C21/G21
expanded
expanded
9 =C9*4/SUM($C$6:$C$9)

the
thefirst
firsttwotwoquarters
11 PROBLEM: Stationer's Supply D E F
table.
of
quarters 12 20 =AVERAGE(C19:C22)
table.MakeMake
ofthethelast
lastyearyearofofthe
13 PROBLEM DATA 21 =AVERAGE(C20:C23) =AVERAGE(D20:D21) =C21/E21
the 14 22 =AVERAGE(C21:C24) =AVERAGE(D21:D22) =C22/E22 sure
sure thatthe
that the
data
datain inthe
theexpanded
expanded
15 Four-
forecasting
table. The Seasonal
16
17 Actual
Quarter Centered Original as a
Moving Moving Percentage of Seasonal Seasonally
forecasting
table. The Seasonal 18 Quarter t Sales, Yt Average Average Moving Average Index Adjusted formulas
formulasin in
Indices
Indicesin incolumn
columnGG 19 1994 W 1 90,640 88.18% 102,786.7
the expanded
are
20 1988 S 2 115,540 108,543 105.95% 109,046.3 the expanded
arethe thesame
sameevery every 21
22
1988 S
1988 F
3
4
99,190
128,800
111,470
114,445
110,006
112,958
90.17%
114.03%
90.46%
115.40%
109,646.5
111,612.8
table
table(the(the
year
yearso soenter
entertheir
their 23 1995 W 5 102,350 117,780 116,113 88.15% 88.18% 116,066.0 ones currently
values in the expanded 24 1988 S 6 127,440 121,850 119,815 106.36% 105.95% 120,277.5 ones currently
values in the expanded 25 1988 S 7 112,530 123,885 122,868 91.59% 90.46% 124,392.8 in
inH47:H50)
H47:H50)
table
table(for (forthetherows
26 1988 F 8 145,080 127,775 125,830 115.30% 115.40% 125,720.3
refer
corresponding
rows 27 1996 W 9 110,490 129,568 128,671 85.87% 88.18% 125,296.9
referbackbackto to
correspondingto todata
42 1988 F 24 202,960 177,045 175,010 115.97% 115.40% 175,876.7
data 43 2000 W 25 157,500 180,258 178,651 88.16% 88.18% 178,606.7 the last period
the last period
and also the rows for 44 1988 S 26 192,240 184,258 182,258 105.48% 105.95% 181,435.6
of
and also the rows for
the
45 1988 S 27 168,330 90.46% 186,075.1
ofdata
data(like
(like
theyearyearfor forwhich
46 1988 F 28 218,960 115.40% 189,741.7
which 47 2001 W 29 168,488 88.18% 191,066.8 the formulas
the formulas
forecasts
forecasts arebeing
are 1988 S
in
inH47:H50
48 30 205,759 105.95% 194,194.5
being 49 1988 S 31 178,505 90.46% 197,322.3 H47:H50
calculated). refer
calculated). referbackbackto
50 1988 F 32 231,317 115.40% 200,450.1
51 C H to
52
53
47 =H47*G47 47 =FORECAST(B47,$H$19:$H$46,$B$19:$B$46)
H46).
H46).
30 54
48
49
=H48*G48
=H49*G49
48
49
=FORECAST(B48,$H$19:$H$46,$B$19:$B$46)
=FORECAST(B49,$H$19:$H$46,$B$19:$B$46)
55 50 =H50*G50 50 =FORECAST(B50,$H$19:$H$46,$B$19:$B$46)
 Other Forecasting Templates
on the CD-ROM
The three parameter-exponential
smoothing and classical time series
analysis templates described previously
are for quarterly data.

The CD-ROM also contains three-

parameter exponential smoothing and
classical time series analysis templates
for monthly data.
31