International Journal of Forecasting 14 (1998) 35–62
Forecasting with artiﬁcial neural networks:
The state of the art
*Guoqiang Zhang, B. Eddy Patuwo, Michael Y. Hu
Graduate School of Management
Kent State University
Accepted 31 July 1997
Interest in using artiﬁcial neural networks (ANNs) for forecasting has led to a tremendous surge in research activities inthe past decade. While ANNs provide a great deal of promise, they also embody much uncertainty. Researchers to date arestill not certain about the effect of key factors on forecasting performance of ANNs. This paper presents a state-of-the-artsurvey of ANN applications in forecasting. Our purpose is to provide (1) a synthesis of published research in this area, (2)insights on ANN modeling issues, and (3) the future research directions.
1998 Elsevier Science B.V.
Neural networks; Forecasting
forecasting task. First, as opposed to the traditionalmodel-based methods, ANNs are data-driven self-Recent research activities in artiﬁcial neural net- adaptive methods in that there are few a prioriworks (ANNs) have shown that ANNs have powerful assumptions about the models for problems underpattern classiﬁcation and pattern recognition capa- study. They learn from examples and capture subtlebilities. Inspired by biological systems, particularly functional relationships among the data even if theby research into the human brain, ANNs are able to underlying relationships are unknown or hard tolearn from and generalize from experience. Current- describe. Thus ANNs are well suited for problemsly, ANNs are being used for a wide variety of tasks whose solutions require knowledge that is difﬁcult toin many different ﬁelds of business, industry and specify but for which there are enough data orscience (Widrow et al., 1994). observations. In this sense they can be treated as oneOne major application area of ANNs is forecasting of the multivariate nonlinear nonparametric statistical(Sharda, 1994). ANNs provide an attractive alter- methods (White, 1989; Ripley, 1993; Cheng andnative tool for both forecasting researchers and Titterington, 1994). This modeling approach with thepractitioners. Several distinguishing features of ability to learn from experience is very useful forANNs make them valuable and attractive for a many practical problems since it is often easier tohave data than to have good theoretical guesses
about the underlying laws governing the systems
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from which data are generated. The problem with the
1998 Elsevier Science B.V. All rights reserved.