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03-Forecasting For OM-PART 2
03-Forecasting For OM-PART 2
25 –
20 –
15 –
10 –
Forecast including trend (FITt)
with = .2 and = .4
5 –
0 – | | | | | | | | |
1 2 3 4 5 6 7 8 9
Figure 4.3
Time (month)
© 2011 Pearson Education, Inc. publishing as Prentice Hall 4-7
Trend Projections
Fitting a trend line to historical data points
to project into the medium to long-range
Linear trends can be found using the least
squares technique
y^ = a + bx
^ where y= computed value of the
variable to be predicted (dependent
variable)
a= y-axis intercept
b= slope of the regression line
x= the independent variable
© 2011 Pearson Education, Inc. publishing as Prentice Hall 4-8
Values of Dependent Variable Least Squares Method
Deviation5 Deviation6
Deviation3
Deviation4
Deviation1
(error) Deviation2
Trend line, y^ = a + bx
Deviation5 Deviation6
Deviation1
(error) Deviation2
Trend line, y^ = a + bx
y^ = a + bx
xy - nxy
b=
x2 - nx2
a = y - bx
130 –
120 –
110 –
100 –
90 –
80 –
70 –
60 –
50 –
| | | | | | | | |
2006 2007 2008 2009 2010 2011 2012 2013 2014
Year
© 2011 Pearson Education, Inc. publishing as Prentice Hall 4 - 14
Seasonal Variations In Data
The multiplicative
seasonal model
can adjust trend
data for seasonal
variations in
demand (jet skis,
snow mobiles)
110 –
100 –
90 –
80 –
70 –
| | | | | | | | | | | |
J F M A M J J A S O N D
Time
© 2011 Pearson Education, Inc. publishing as Prentice Hall 4 - 22
Associative Forecasting
Used when changes in one or more
independent variables can be used to predict
the changes in the dependent variable
y^ = a + bx
^ where y= computed value of the
variable to be predicted (dependent
variable)
a= y-axis intercept
b= slope of the regression line
x= the independent variable though
to predict the value of the
© 2011 Pearson Education, Inc. publishingdependent
as Prentice Hall variable 4 - 24
Associative Forecasting
Example
Sales Area Payroll
($ millions), y ($ billions), x
2.0 1
3.0 3
2.5 4
4.0 –
2.0 2
2.0 1
3.0 –
3.5 7 Sales
2.0 –
1.0 –
| | | | | | |
0 1 2 3 4 5 6 7
Area payroll
© 2011 Pearson Education, Inc. publishing as Prentice Hall 4 - 25
Associative Forecasting
Example
Sales, y Payroll, x x2 xy
2.0 1 1 2.0
3.0 3 9 9.0
2.5 4 16 10.0
2.0 2 4 4.0
2.0 1 1 2.0
3.5 7 49 24.5
∑y = 15.0 ∑x = 18 ∑x2 = 80 ∑xy = 51.5
Nodel’s sales
3.0 –
nxy - xy
r=
[nx
(a) Perfect positive x
2
- (x) 2
][ny
(b) Positive ]
2
- (y) 2
x
correlation: correlation:
r = +1 0<r<1
y y
^
y = 1.80 + .30x1 - 5.0x2
∑(Actual demand in
period i -
Forecast demand
Tracking in period i)
signal = ∑|Actual - Forecast|/n)
Acceptable
0 MADs range
Time
1 90-10/10
100= -1 -10 -10 10 10 10.0
2 95
-15/7.5
100= -2 -5 -15 5 15 7.5
3 115 0/10
100= 0 +15 0 15 30 10.0
4 100-10/10
110= -1 -10 -10 10 40 10.0
5 125
+5/11110
= +0.5+15 +5 15 55 11.0
6 140
+35/14.2
110= +2.5
+30 +35 30 85 14.2