Professional Documents
Culture Documents
CH 3: Forecasting: Techniques and Routes
CH 3: Forecasting: Techniques and Routes
CH 3: Forecasting: Techniques and Routes
Top-down route
Qualitative Bottom-up route
Quantitative
Delphi method
Simple regressions Nominal group
Multiple regressions technique
Time trends Jury of executive
Moving averages opinion
Scenario projection
2
Quantitative Forecasting
Quantitative: Regression with related variable
5000
Sa les U n its
4000
3000
Sales
2000
1000
0
0 500 1000 1500
Number of Households
4
Quantitative Forecasting
Quantitative: Sales regressed on households.
SUMMARY OUTPUT SALES REGRESSED AS A FUNCTION
Edited output OF from the Excel regression.
HOUSEHOLDS
Regression Statistics
Multiple R 0.824389811
R Square 0.67961856
Adjusted R Square 0.644020623 <== "Strength" of the regression
Standard Error 429.2094572
Observations 11
5000
4000
Sales Units
3000
Sales
2000
1000
0
1990 1995 2000 2005
Year
10
Quantitative Forecasting:
Fitted Regression Line
Sales Regression: Line Fit Plot
5000
4000
Actual
3000
Sales
2000
Predicted
1000
0
1990 1995 2000 2005
Year
11
Quantitative Forecasting:
Regression Line Information
From the Excel spreadsheet.
EDITED SUMMARY OUTPUT REGRESSION OF SALES ON YEARS
Regression Statistics
Multiple R 0.9215
R Square 0.8492
Adjusted R Square 0.8324 <== "Strength" of regression.
Standard Error 294.5125
Observations 11
12
Quantitative Forecasting:
Regression Line Use
Equation for the regression line is:
Sales in year = -395541.56 + (199.87 x Year)
Forecast of sales for the year 2005 is:
Sales in 2005 = -395541.56 + (199.87 x 2005)
= 5198 Units
(Note: the large negative Y axis intercept results
from using the actual calendar years as the X axis
scale.)
13
Quantitative Forecasting:
Regression: Auto Forecast by Excel.
Sales by Year, With Automatic Three
Year Prediction
6000
5000 SALES
4000
Sales
3000
Simple Linear
2000 Regression,
Forecast Out to
1000 Year 2005
0
1990 1995 2000 2005 2010
Year
14
Quantitative Forecasting:
Moving Average- Auto Plot
Sales Units Per Year With Fitted Two
Year Moving Average
5000
4000
Sales Units
SALES
3000
2000 2 per. Mov.
Avg.
1000 (SALES)
0
1990 1995 2000 2005
Years
15
Quantitative Forecasting:
Notes on Excel Auto Plot.
Excel will plot, and automatically forecast, a
data series which has a functional relationship.
For example, a regression trend line.
The auto plot is driven through the ‘Chart’
menu as ‘Add Trendline’. A particular forecast
is specified via the dialog box.
Future point data values cannot be read
from the automated trendline.
Non-functional relationships, such as a
moving average, can be plotted, but
cannot be automatically forecast.
16
Forecasting Routes
Top-Down
where international and national
events affect the future behaviour of
local variables.
17
Forecasting Routes