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Forecasting Using ANN's

Forecasting Using ANN's

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Published by Andaleeb Mudasira
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Published by: Andaleeb Mudasira on May 20, 2011
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06/09/2013

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A simple moving average (SMA) is the unweighted mean of the previous n data

points. For example, a 10-day simple moving average of closing price is the mean of the

previous 10 days' closing prices. If those prices are

then the

formula is

When calculating successive values, a new value comes into the sum and an old

value drops out, meaning a full summation each time is unnecessary,

Perhaps the simplest of all Time series forecasting techniques is a moving aver-

age. To use this method, we calculate the average of, say, three periods of actual demand

and use that to forecast the next period's demand. If this three-period average is to be

used as a forecast, it would have to forecast demand in a future period. [14]

Because each average moves ahead one period each time, dropping the oldest

value and adding the most recent, this procedure is called a moving average. The number

of periods to use in computing the average may be anything from 2 to 12 or more, with 3

or 4 periods being common. If the time series is such that there is no upward or

downward trend, then the moving average is a satisfactory technique. If, how-ever, there

is any trend or any seasonal effect, then the moving average will not work very well.

Moving averages lag behind any trends.

3.8 BASIC FORECASTING TECHNIQUES

Forecasting techniques (APPLIED IN THIS THESIS) can be divided into two

categories: qualitative and quantitative. The former, which involve numbers, uses

methodology that is not mathematical. Qualitative techniques rely on judgment, intuition,

and subjective evaluation. Among the major techniques within this category are market

research (surveys), Delphi (panel consensus), historical analogy, and management

estimation (guess).

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