UNIVERSIDAD AUTÓNOMA DEL ESTADO DE MORELOS

FORECAS
FACULTAD DE CIENCIAS QUÍMICAS E INGENIERÍA

TS
NAME OF THE TEAM MEMBERS
• CASTELO SALAZAR KARLA MARIA
• GONZALEZ SOTO MARCO EMILIANO
• MONTIEL CAMPOS DEBBIE
• PACHECO BARBOSA JOSE JAIR
• PERALTA GARDUÑO MONSERRAT
• RAMIREZ DELGADO INGRID ARIZBETH
• SOLANO RIVERA LEYDI SAMANTHA

NAME OF INSTRUCTOR: JUAN CARLOS CHÁVEZ VERGARA

PLACE AND DATE: CUERNAVACA, MOR, August , 2021

 SPECIFIED PERCENT OVER LAST YEAR

•This method multiplies demand

data from the previous year by a
user specified factor; for
example, 1.10 for a 10%
increase, or 0.97 for a 3%
decrease.
•Required demand history: One
year for calculating the forecast
plus the user specified number
of time periods for evaluating
forecast performance.
• User specified factor = 1.15 in this example.
• October, 2004 demand = 123 * 1.15 = 141.45
November, 2004 demand = 139 * 1.15 = 159.85
December, 2004 demand = 133 * 1.15 = 152.95
• POA = (141.45 + 159.85 + 152.95) / (114 + 119 + 137) * 100 =
454.25 / 370 = 122.770
• MAD = (|141.45 - 114| + |159.85 - 119| + |152.95 - 137|) / 3 =
(27.45 + 40.85 + 15.95) / 3 = 84.25/3 = 28.08
 CALCULATED PERCENT OVER LAST
YEAR
The Calculated Percent Over Last Year formula multiplies demand data from the previous
year by a factor that is calculated, and then it projects that result for the next year.
This method is useful to forecast short term demand for seasonal items with growth or
decline. Example:
Specify n = 4 in the processing option to compare demand history for the most recent four periods to those same four
periods of the previous year.
This table is history used in the forecast calculation, given n = 4:
September forecast equals 131 × 0.9766 = 128
Past Jan Feb Mar Apr Ma Jun Jul Agu Sep Oct Nov Dec rounded to .
year y October forecast equals 114 × 0.9766 = 111
1 128 117 115 125 122 137 140 129 131 114 119 137 rounded to .
2 No No No No No No No No 118 123 139 133 November forecast equals 119 × 0.9766 = 116
rounded to .
December forecast equals 137 x 0.9766 = 134
Calculation of Percent Over Last Year, given n = 4.
Past year 2 equals 118 + 123 + 139 + 133 = 513.
Past year 1 equals 131 + 114 + 119 + 137 = 501. Percent of Accuracy Calculation:
ratio percent = (501/513) × 100 percent = 97.66 percent. POA= (forecast sales during holdout period/
This table is the forecast for next year, 97.66 Percent Over Last Year: actual sales during holdout period)*100
Jan Feb Mar Apr May Jun Jul Agu Sep Oct Nov Dec (128+111+116 +134 )
𝑃𝑂𝐴= 𝑋 100=¿
125 114 112 122 118 134 137 126 128 111 116 134 (118 +123 +139+133)
𝑃𝑂𝐴= 95.32
 LAST YEAR TO THIS YEAR

This forecast method uses the Last Year POA

to This Year formula which calculates the PERCENT OF ACCURACY
year's forecast based on the prior year's
demand. .
2020
EXAMPLE 2021
POA=
The following information is available for the years 2019 and 2020. [(122+138+132)/(113+118+136)]*
The actual demand for the years 2019 and 2020 and a forecast for the 100%= 106.81%
year 2021 and a simulated forecast for the year 2020 is needed. Note:
When the total of forecast demand
exceed the total of actual demand,
January 2019= 124 the ratio is greater than 100 percent.
January 2020= 124 when it is recommended to use the
method
This method might be useful in
budgeting to simulate demand at the
present level. The product is mature
and has no trend over the long run,
but a significant seasonal demand
pattern might exist.
MOVING AVERAGE
The reason for calculating the moving
average of a stock is to help smooth
out the price data over a specified
period of time by creating a
constantly updated average price.
It uses the daily closing price of a
stock as a data point. This is
averaged over a given period. These
time periods used to be somewhat
standardized.
Example
The following information is provided, considering the years 20017 and
2018. Actual demand for the years 2017 and 2018 and a forecast for the
year 2019 are required.
Number of periods to be included in the average = 3 in this example.
Forecast Calculation
• January forecast: 114 + 119 + 137 = 370, 370 / 3 = 123.333
• February forecast: 119 + 137 + 123 = 379, 379 / 3 = 126.333
• March forecast: 137 + 123 + 126 = 379, 386 / 3 = 128.667
Percent of Accuracy Calculation
POA = (133.3333 + 128.3333 + 121.3333) / (114 + 119 + 137) * 100
POA= 103.513
 LINEAR APROXIMATION
Linear Approximation calculates a trend that is based upon two
demand history data points. that define a straight trend line that is
projected into the future. This method is useful to forecast demand
for new products, or products with trends that are not due to
seasonal fluctuations.

Example
The model is applied to the case of the Amazon.com company, as it is one of the most representative companies of
internet companies
Table. Unique Monthly demand to Amazon.com (Figures in Millions)
Simulated
Month sales 2000 sales 2001 2001
forecast
Forecast Calculation: Percent of Accuracy Calculation:
Jan 12.36 22.44 24 periods to include in regression (n)
Feb 11.18 22.2 26 = 2 in this example POA= (forecast sales during holdout period/
Mar 11.92 22.08 28
Apr 10.99 21.67 Jan forecast: (22.9-18.99) / 2* 1+ actual sales during holdout period)*100
May 11.52 22.55 22.9 =24.9
Jun 13.53 24.41
Feb forecast: (22.9-18.99) / 2 * 2+ ( 24.9+26.8+ 28.8)
Jul 13.91 26.15
22.9 =26.8 𝑃𝑂𝐴= 𝑋 100=¿
Aug 18.31 26.22 ( 22.44+ 22.2+ 22.08)
Sep 16.75 27.24
Mar forecast: (22.9-18.99) / 2 * 3+
Oct 18.99 31.42
22.9 =28.8
Nov
Dec
23.19
22.9
36.75
40.02 𝑃𝑂𝐴=116.09
 SECOND DEGREE
APROXIMATION
Linear Regression determines values for and in the forecast formula with the objective of fitting a straight line to
the demand history data. Second Degree Approximation is similar. However, this method determines values for , ,
and in the forecast formula with the objective of fitting a curve to the demand history data.

THIS METHOD MAY BE USEFUL WHEN a product is in the transition between stages of a life cycle. For example,
when a new product moves from introduction to growth stages, the demand trend may accelerate.

Month 2020 demand 2021 demand

Janury 125 128

February 132 117
March 115 115
EXAMPLE
April 137 125
The table presents the data of the number of demand (in May 122 122
thousands) obtained during the decline in demand of the June 130 137
smartphone Xiaomi Pocophone F1 in India, during 2020
July 141 129
and 2021.
August 128 140
September 118 131
October 123 114
November 139 119
December 133 137
 𝑄1 = 𝐴𝑝𝑟
Apr +𝑀𝑎𝑦 𝐽𝑢𝑛=125 +122+137=384
+ May ++Jun
𝑄 2= 𝐽𝑢𝑙+
Jul + 𝐴𝑢𝑔+𝑆𝑒𝑝=140+129+131=400
Aug + Sep
𝑄 3=𝑂𝑐𝑡
Oct +𝑁𝑜𝑣
+ Nov + +𝐷𝑒𝑐=114+119+137=370
Dec
2
𝑌 = 𝑎+ 𝑏𝑥+ 𝑐 𝑥
𝑄1 =𝑎 + 𝑏𝑥 + 𝑐 𝑥
2
𝑥 =1 𝑄1 =𝑎 + 𝑏 + 𝑐 (1)
𝑄 2=𝑎 +𝑏𝑥 +𝑐 𝑥
2
𝑥 = 2 𝑄 = 𝑎+𝑏 ( 2 ) +
2
𝑄 𝑐2(2=𝑎
2
) +2 𝑏+ 4(2)
𝑐
𝑥 =3 𝑄 =𝑎 +𝑏 𝑄 =𝑎 +3 𝑏 +9 𝑐
(3)
2 2
𝑄 3=𝑎 +𝑏𝑥 +𝑐 𝑥 3 ( 3 ) +3𝑐 (3 )
Find b
( 2 ) − ( 1 ) =𝑄2 − 𝑄1 = ( 𝑎 +2 𝑏+ 4 𝑐 ) − ( 𝑎 +𝑏+𝑐 ) =𝑏+3 𝑐 𝑄2 − 𝑄1 =𝑏+3 𝑐 𝑏=𝑄2 − 𝑄1 − 3 𝑐
Find a
( 3 ) +3 𝑏 +9 𝑐
𝑄 3=𝑎
Find c
(1
𝑄1)=𝑎 +𝑏+𝑐

𝑐 = ( 𝑄1 + 𝑄 3 − 2 𝑄 2 ) / 2
Calculates a, b, c

2
( 𝑄 1+ 𝑄3 − 2 𝑄 2) 384 + 370 − 2 ( 400 ) 𝑌 = 𝑎+ 𝑏𝑥+ 𝑐 𝑥
𝑐= = =− 23
2 2 2
𝑌 =322+ 85 𝑥 −23 𝑥
− 𝑄 1 − 3 𝑐 = 400 − 384 − 3 ( − 23 ) =85
 294
𝑥= 4
𝑌 = 322+ 85 ( 4 ) − 23 ( 4 )2=294 = 98 per month
3
172
𝑥 =5 =57.33
𝑌 = 322+ 85 ( 5 ) − 23 ( 5 )2=172 ≈ 57 per month
3

4
𝑥 =6
𝑌 = 322+ 85 =1.33
(6 )− 23 ( 6 )2 =4 ≈ 1 per month
3

Month 2020 demand 2021 demand 2022 forecast Simulated 2021

forecast

Janury 125 128 98

𝑄1 =( 𝐽𝑎𝑛 − 𝑀𝑎𝑟 )=128 +117 +115=360

February 132 117 98 𝑄 2=( 𝐴𝑝𝑟 − 𝐽𝑢𝑛 )=125+122+ 137=384

March 115 115 98 𝑄 3=( 𝐽𝑢𝑙 − 𝑆𝑒𝑝 ) =129+140+ 131= 400

April 137 125 57

May 122 122 57
June 130 137 57
July 141 129 1
( 𝑄 1+ 𝑄3 − 2 𝑄 2) 360 + 400 − 2
𝑐= =
2 2
August 128 140 1
September 118 131 1
𝑏=𝑄 2 − 𝑄 1 − 3 𝑐 =384 − 360 − 3 ( − 4 ) =36
October 123 114 136
4082
November 139 119 136 𝑥= 4
𝑌 = 328+36 ( 43 =
)− 4 ( 4 ) = 408 136per month
December 133 137 136

POA=
POA
(136+136+136)/(114+119+137))*100=110.27
 FLEXIBLE METHOD
• The Flexible Method (Percent Over "n" Months Prior) is similar to Method 1,
(Percent Over Last Year). Both methods multiply demand
data from a previous time period by a user specified factor, then project that
result into the future.
Forecast specifications:
• Multiplication factor. For example, specify 1.15 to increase the previous dem
and history data by 15%. Example:
• Base period.
1) Forecast calculation
Simulated 2005 • January forecast: (114 * 1.15) = 131.1
Month 2004 demand 2005 demand 2006 demand
forecast or 131
January 125 128 131 • February forecast: (119 * 1.15) =
February 132 117 137 136.85 or 137
March 115 115 158 • March forecast: (137 * 1.15) = 157.55
April 137 125 151 or 158
2) Simulated forecast calculation
May 122 122 157
• October 2005 demand = 129 * 1.15 =
June 130 137 181 148.35
July 141 129 173 • November 2005 demand = 140 * 1.15
Agust 128 140 181 = 161
September 118 131 208 • December 2005 demand = 131 * 1.15
October 123 114 199 148.35 = 150.65
November 139 119 208 161 3) Percent of Accuracy Calculation
December 133 137 240 150.65 • POA = (148 + 161 + 151) / (114 + 119
+ 137) * 100 = 124.32
WEIGHTED MOVING AVERAGE
• A Weighted Moving Average puts more weight on recent data and less on past
data. This is done by multiplying each data value by a weighting factor.

• This method is useful to forecast demand for mature products with demand that is
relatively level.

• There is no rule for which weight choose. Experience and demand analysis are
more frequently used to determining the weight of each period.

EXAMPLE
A department store has found that in a four-month period the • Applying the formula, we have;
best forecast is derived by using 40% of the actual demand for WMA= 0.40 (95)+0.30 (105) + 0.20 (90) + 0.10 (100)
the most recent month, 30% of two months ago, 20% of three
months ago and 10% of four months ago. Find out the forecast ( 0.40 + 0.30 + 0.20 + 0.10 )
for the fifth month, if the actual demand for the four months Month demand Forecast
are: 1 100
Month demand Weights * In our formula, the sum of 2 90
1 100 month 4 40% the weights must equal 1. 3 105
4 95
2
3
90
105
month 3
month 2
30%
20% 5 97.5
WMA= 97.5 Units
4 95 month 1 10%

Formulas • Percentage of accuracy;

POA = 97.5 (100) = 102.63%

95
 EXPONENTIAL SMOOTHING WITH
MOVING WEIGHT
This method calculates a smoothed
average, which becomes an estimate
representing the general level of
demand over the selected historical
data periods.
This method requires demand data
history for the time period that is
represented by the number of periods
best fit plus the number of historical
data periods that are specified. The
minimum requirement is two
historical data periods.
This method is useful to forecast
demand when no linear trend is in the
data and doesn’t require a large
historical demand data
Example
Luz Verde is an insurance company that has decided to expand its market
to the capital city of a country. As it is the city with the most inhabitants,
they have decided to start offering car insurance services.
As an initial exercise, the company wants to forecast how much vehicle
insurance will be contracted by the people of the capital city.
The demand forecast for period 1 is 2869 car insurance purchased by
people, but the demand for that period was 3200. The company,
according to its criteria, assigns α = 0.35.
Ft= (0.35 x 3200) + (1 – 0.35)(2869) = 2984.85
POA
POA=
[(3044.62+2965.65+2898.22)/(2819+
2773+2321)]*100%= 112.58%
 EXPONENTIAL SMOOTHING 2 WITH
SEASONALITY
Exponential smoothing is a time series forecasting method for
univariate data that can be extended to support data with a Note
systematic trend or seasonal component.
It is a powerful forecasting method that may be used as an
alternative to the popular Box-Jenkins ARIMA family of methods. Minimum required demand
Forecast specifications: history: One year plus the
• a = the smoothing constant used in calculating the smoothed number of time periods that
average for the general level or magnitude of demand. Valid are required to evaluate the
values for alpha range from 0 to 1. forecast performance
• b = the smoothing constant used in calculating the smoothed (periods of best fit). When
average for the trend component of the forecast. Valid values two or more years of
for beta range from 0 to 1. historical data is available,
• Whether a seasonal index is applied to the forecast. the system uses two years of
data in the calculations.
At = α (Dt/St-L) + (1 - α)(At-1 + Tt-1)
Tt = β (At - At-1) + (1 - β)Tt-1
Exponential Smoothing 2 with seasonality

The forecast is then calculated by

using the results of the three
equations:
Ft+m = (At + Ttm)St-L+m

February of past year 1 Seasonal Index,

S2 =
S2 = (123 + 117 / 1534 + 1514) × 12 =
0.07874 × 12 = 0.9449
February of past year 1 Smoothed
Average, A2 =
A2 = α(D2 / S2) + (1 – α) (A1 + T1)
A2 = 0.3(117 / 0.9449) + (1 – 0.3)
(128.51 + 0) = 127.10
February of past year 1 Smoothed
Trend, T2 =
T2 = β(A2 - A1) + (1 - β)T1
T2=0.4 (127.10 – 128.51) + (1 – 0.4) × 0
= –0.56
 PERSONAL CONCLUSIONS
• Castelo Salazar Karla Maria: Through this research I was able to understand how organizations can predict their future
demand and based on this produce the closest quantity of products that they will need to introduce in the market in
future periods, allowing a fair production that does not generate expenses for inventories or waste. I also was able to
conclude that in reality there is no perfect method that predicts any sale of any product, a method that works in a
company with certain conditions may not work in another company, in the same way, the period through which a
product its in its life cycle must be analyzed. Making a good forecast can lead a company to success and that can be
seen in the Tupperware company, which has computers that allow estimating production in each of its plants, allowing
it to be distinguished for being a quality company with a large number of demand around the world.

• Gonzalez Soto Marco Emiliano: In conclusion, the forecast helps us to look at the horizon in a company and set goals by
calculating demand and commercial behavior that we have had in recent years, large companies use the use of the
forecast, companies like bimbo have managed to take advantage of the variants that the forecast has had and that
helps them to have a better performance, because what happens is that this vision that the forecast gives you tells you
when and what you should do in certain months in your company, for example the demand of Certain products are
seasonal, so a company with this vision has the opportunity to reinvent itself during the year to be able to attack the
market, it knows when its strong demand months are and that helps it grow and also improve its weaknesses, because
it also broadens your vision of which months you sell less and why.

• Montiel Campos Debbie: All methods are useful when they are used in an appropriate way and according to the history
of the company, to identify which method would help us the most we must know our demand history, our high and low
seasons, know our market and take into account that it is changing and therefore we must adapt to it, in the case of the
veterinary products marketer, they use a forecast according to the demand of their staff, with a certain percentage of
growth in said demand, but it is variable, for obvious reasons they do not comment on the type of forecasting method
that they use, however, I consider that it is adequate for the type of products they handle.
 PERSONAL CONCLUSIONS
• Pacheco Barbosa José Jair: To sum up, proper demand forecasting enables better planning and utilization of resources
for business to be competitive. It is true that Forecasting is an integral part of demand management since it provides
an estimate of the future demand and the basis for planning and making business decisions. In fact quantitative
methods are available to help companies forecast demand better. Since forecasts are rarely completely accurate,
management must monitor forecast errors and make the necessary improvement to the forecasting process.

• Peralta Garduño Monserrat: In conclusion, the forecast is very important for the companies, because this allow them
to plan their production. There are different methods and the most suitable one is chosen according to what the
company needs, the information you have, as well as the way in which it is going to work.
Some companies, such as toy companies, choose the type of method for their forecast taking into account their way
of working, that is say in their case the production have more demand some months than others, but this is
something that is repeated year after year.
Then they are likely to choose a method that gives them information from year to year.

• Ramirez Delgado Ingrid Arizbeth: In conclusion, the methods seen above create a scenario of the forecasts depending
on the use you need and seek to give them, since each method can become more successful if used properly, and
under the criteria mentioned; Let's take for example the Amazon company that more and more users know about it
and buy more online for convenience, it is preferable to use the linear approximation method because it has more and
more demand and in this way they can be prepared for the following periods. However, we must be careful since over
long periods of time these change and constantly have to be recalculated to have a better prognosis.
 PERSONAL CONCLUSIONS
• Solano Rivera Leydi Samantha: The future demand for a product in a company depends on different factors,
sometimes it is difficult to determine exactly. Therefore, the forecast allows us to carry out projections and
analysis of the demand of a company, all within a certain period of time. In conclusion, the Forecast helps us
understand demand both in the short term and in the future as it broadens horizons, this planning allows
optimizing all processes. There are different methods, and although none is perfect and works differently for
companies, it is through these methods that they become competitive and more productive.
 GENERAL CONCLUSION
In conclusion, forecasting is a technique that allows the use of past situations to predict future expectations, to carry out
such projections it is necessary to use a set of methods. Forecasts are tools that allow us to realize the way in which our
company develops over the years, giving key points and broad perspectives that could tell us the strengths and
weaknesses of our company, we have several companies that implement the forecast to visualize and know how much
demand there will be in the coming years and that can prepare them before the market demands and this maintain the
advantage in the market, we have a Bimbo to implement these forecasts or Amazon that are companies that they are
constantly growing and have to do a forecast study to be prepared for the year. Let's say it is a visualization for your
company to prepare and can be correctly designed to meet the expectations of the market. However, every method need
to be carefully selected for the particular use that you want to give them. We cannot use the same method between two
companies with different conditions or between different periods of the life cycle of a product; a bad prediction could lead
to a large variation between predicted and actual demand. Large variations can lead to excess inventory, for example
suppose that in a year it is forecast that 50 000 products will be sold and that in reality only 10 000 are sold. The 40,000
products can end up in inventory and generate unnecessary expenses, or if the forecast is too low, demand can be lost due
to lack of inventory.
 BIBLIOGRAPHY

● Thomas E. Vollmann, William L. Berry, D. Clay Whybark. (2005). Manufacturing Planning and Control Systems for
Supply Chain Management. United States of America: McGraw-Hill.

● .Handmade ornamental leavesAlonso Conde, A. B. Rojo Suárez, J.. 5 de febrero de 2010. MODELOS DE ESTIMACIÓN
DE INGRESOS EN EMPRESAS DE INTERNET. En Investigaciones Europeas de Dirección y Economía de la Empresa (Vol.
11,, 32-34) Universidad Rey Juan Carlos

● Armstrong, J. S. (2001). Evaluating forecasting methods. In Principles of forecasting (pp. 443-472). Springer, Boston,
MA.

● Wheelwright, S., & Makridakis, S. (1974). Forecasting Methods for Managers.

● Wheelwright, S., Makridakis, S., & Hyndman, R. J. (1998). Forecasting: methods and applications. John Wiley & Sons.

● Abraham, B., & Ledolter, J. (2009). Statistical methods for forecasting (Vol. 234). John Wiley & Sons.