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good n~s~1 binormal ..random variable where the nu III[ier of potential buyers is c anslant but the' pro ~ab~..ity of u t; ustomer P LLI('C hase 'j s upd 'I, ted usin g p~~;s:[, les. Chana and sa F\I'Jre .{,1,1;;)71} visualize moathly derna nd.; as a ' xed frac:[i~· ="'1" L 11,:~[ IL] i fl '! ': I ..nJ:4'1I1 Ior a -',ilY ~~ g _'j od, T'·l t>.d de rna nd S; ... n d e. are ~j)0 d>tJh~'·la. mo iit hJ y . ale.S are re vea led . In forec .. astine new product dem, .nds, the 'BilSS Iunetion (Bass, 1969') is. ( ftcn used. Norton and B~~s·(].98-7) 1110de.·] diffusion of ,L new product (deman l migr a ti m j u the market s, ,Kura Wt1. rwala ~], Ma tS1HJ' (",i t: 96~)st lI.. I~ sensonal nd .P;'C~ emands, (11 bot h 1110 del s' p'ar~U'1,~1t;r~r 1h·e: .'B'·l.~:S d 0 f'UllcU,"ll ar~ ~l].')ll:~lt.deiti ~·tH[~~dly,. p l" no t b.et 's;~n~H~~~~.tu,d 'ie's: f... ).rec~~,s~, r,'e'visi.o'ns 'W',t h ·p;(~:r~.iaU i y o~·,~.~'r\ied (-delli.and •.d·· t.·l~ Th:~ nl'.iiLi, d:riv~~lg ~:c"e~i n '8,..HJUy i ~ln.d ~"ruel"~n~J l'9 88t Ke,kt·f" t# u{~ (I (,:·O) bt.nd .-' 'U ~rr'~ ,(: rtl ~llid .Eli-z,ondC!l (-1997) [: presl,I,'nl}n;g tha l the nJrec,asle.'l, q ua.nli ty h~rev.c"]:I'eli in Sh::'pS (', V(;.f tj rn·'· t M-reover" pa rl.i~i'l .obs'ervt.1.ti:t)rl~ C.In. be u'se·d to to'["ecast th,e \iVhole t.luantity., For "_··.an1,plc i'n 0[[1" "1 lh.e nl:--'deh~ :it is ·l·~~:lltl1.ed 1. h t~, l h,e r~llj 0 (1r 0' re1e rs ret: ci vet:! u pr L. '. a CI~r L,.~n ~~n1.e ~ [bolt: t i'
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od's demand through a random multiplier whose exneeted.Iii.;' v··qlu [' ~~: J,I\"r·'1-L -r t' '~1, t Jel Il ~ . he 'n.., 'I~~' 0 .-1 A··n' 8•~ J L'l~ »r al. (" ~'71~'1 .,11 nd M.···.·~.1·~ I ~~lbi:·)· .... ;,r~1·1 '(JII-1(J..:i Wu (? O':iI'' ~ 1):. :"[1 re do "n' All' lJ _ semiconductor demands and ····9are particularly relevant. " _owever , 'I h~cy p r hI1Il ]..J Y ai '1111 to gen [ora te dema nd ,,'C~·· j na :riQ'~1 forecasts whereas 0 ur nrilrt-'lry goal i'~ to evaluate the q-ual~t.y of the ~'.. ecasts, r .f.\~fa, F as ~V¢ kn O.\N, th e first W() rk tha t ',1 t tempted to un: Jets t. 11:d ~he' .'CVt· 'I u t j on of fo reca S, ts is ··H a ll_~:,me n (1 96-9). p~'-r- : '·0m e real -Ii Fe da tu .sets ~ 'b, ~,.st a tistica 11 v,;'a Hdat e. 8. the c; y hypethesis that ratio's of successive forecasts are Log ... · normal varia tes. Graves "f 0'1... (] 98.6) I 1J treats the 'for J castirrg process as a black-box and study fo.r~cast va ria rices. .I~J wevcr, Graves et al. ( '19'86) ass LUlU!'· '. t hat o , . Iore asts are serially independent. Heath and Jackson ( 19·94 )~ uun .. ware :o:f' l he 'W'01'1<_ of OT11 ves ,eft tl.l. -( 19·:86·) piropo ':f, a more aeneral m ~.;d: all owin n" 's,eri' J. de] "mdence Ii e..., and' esttmate the ..!z;()var:i.anl~c matrix ef slationary demand feree I: t:-:.',. That rnatrix L 8.1s: u;~'.e_d· to simulate demand forecasts, l n recent studies, G6U.(i .(~9'9.6) and To,klay 11 9-9"8)" have investiga ted the value' of incorporating Chis techniq U .. into prod uctlon planning and [i nventory bo ld' ing, respectively .. Graves et ·al.. (l9:9.8:). also use a HeathJ,t ckson ft.i J11~\V,rk tc stu ~,y1'1'"....dnction smoothing a.. nd safety stoe k hol din g. tra_. e-offs, T ey sh 'w how .-0 linearly (R'nvc't'l ror'eC~,Sit :llpdates,. i,ntOI pr-Odl.tctL· :'0 sclte1dul1c tlP-' d~rt<s '.", 'lh~l a In:.~'a,S·li.re ;'f ',f,:d U: licfn SH11'~0' n ~'nlg i~ .. J111nlnnized ~ubje·cl. to ~~:Ilurpp. :'r bQuu,d o,n' ~i 'fH'e,li c·u.r·e of
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Appendix C, '\\~'e strate how :0111'" ~~:OJ~k., be e~..ended ill can t ,' .. , ":.rIi'CC:···O·ll· 'n'-'l .d ~" te 1-. ,&, 'b., i.1 , tl::J .' 'ftll ~lipruljJ forecasts are r¢la:it:ed to perceived age forecasts ·:Vla il. nonlinear ramp curve: R (5 ee EqUlttioI1 .,(~')J~ l 'erce l~V¢:.[ age forecas t s are un biased hly 6" \) but. there '\1\ri U, be bias in fraction, ,C'i] Iore asts. PF .l,V( ~ That ,~" becaus ' .. R is a ,.+~~ "'. " _,.':~~' ... '. . ,,~: --~ - - . - I" 't· n -.. - E" i~i,l: t'~ ). - .C· ( J.{ . lJ it;) I r~· j, ='- R''' ' f:1p~t(!'f.1 r:.. :a. nonum ;i.U U [.C' H. SO '. ~,~:': o.~ '1;(E ( ,~:~r(:,·',f.~~')) ,h~:tt~c."n regions where the ramp rltDCI[i~~n f == I is approximately h nea r...this I~;r(.}nl ineln'i('l ~~ i)lduc.e~lljd(IS Will be small. W'e \Y~H revisit the n)~l_gn~i ~ud~ .::.f the bias.in Lh:e nurnericalexperirne ..'~tsection, ·P'. rcei ved -age rc..·~.eC,(~.$L::'coustituu ~ I"L Martingale, l.e., . p t u, 'SoP • . ,.- d E( LI~",:1 IJ", ' ~ !(j/':~' I ~. 'lr' I _. H S r .< <; t, .ip' 'erceivec age fo. [~;f;!iI~ ~ t ~'I' 'IiI:aL~I:~~jt·.. -I . 1.,. ~ .,_.,O,.~"'IJ ,t L-] : ted '''L'~ i-o.,~ 11-'d. ·I,L_·.;.·_ n : 1 e~ 'pt"-' e·iI':""t·· ,,;., MI·~·d· LJ~ l' '0' . ~"'L.i] ~, ~v . ~i: 0 ns, i. "WJt: '.cl·tll.d d fine lj~~j~!~l .£:._.' 11 "1 ~J~~). "0 uld e ~ 'V.~,·.· also define (~I;_~:'~' as minimum mean-squt .red error forecast. The~~eapproaches a re 'd, scussed ,i n Brockwell "1' d Da vis ("r9g'7)'~ and I-J. a th .and J tcksen (19~)'.4·). e Now we are in a 1"Oij tion tl.~~' gi,v:e-·Fo:n.,nal sti .ternents of our first two :mpe.·'I) .nd flee as surn p'l'" (:111S ..
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ance nIH tr b{~' ~J. W II;; L] S. ,~:lU' ,ttL :.n (7) "rep ~ cing LI- ith D and L' with .~.~)l:~" genera te Iarnilv loreca sts starting fr .til '
i~

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lise ':I~also gi:v_e:~land is .a symmetric cubic 'p, ~ n o rnial : ,R 0,((),) == 'l{~'::!_. 2 :'~'.. So I1l~' tim .,~ ,.,'., ul ate d Y J n is, n ormn II v ..,~lmsr[ hU,:'lf!"_'d,, 'i Ih I~X,:~J,,~' l eeted val lie [1·~N",r~~~ ~ tjP~-'.~~'~·,. ~"rac't.l <ll~L,.1 ferecas is tha J are made in the sam - petiUd are r,tl' , ~:t i ,lr,It_" I :~'·lJ~ .ia ] ,~ O'U~"".· "r~o,tde..r,. i,.t:-.. f~;l1i . > SLI~rce newer technclozies ib u,r.tl ~ '~tJi " 'I"!-p"I':,l~~ec lder a nes. V'N~ ssu t '1- ',' ,"~'~\r "1' ~'.).'" '0:'-:- I fJij!""':r~'~"'1t~1 t·-p~1 :on 'T he: C',,) ~t'1tia,n ce mal r iX' f J hi vee tor Ul b e ~x pressed in f Ior H,.ed s, 'To achieve this, otn ..of-order fractional ill terms .t1:F E using (7 }., Having done so. computing the f\ recasts ~lJC;' sorted, Lastlv ..product demand forecasts are" covariance In (~3) requires ,_:~,din1;c.l1, uonal numerical n integrations. Such integral ions become tedious. when R: is obtained from tile following equa ti . ,. : a piece-wise quadratic spline j, unction, ~rs,n .ou r numerical i "fl.), r.t!r' == {, iJ.{t Ljj,: ie~; _ t,·fJ.~N:i~,! }',• +' {j_ " fl' I. experiments, T~l.U~,!we prefer '['vltnte ... ·.rlo procet I..~I reo '·' W ith this d,lcscr~ptio.n of Step "~'~ cc mplete , u.r definiwe t,IO[~, of S ~l·.. AM~; ··'~
,

forecasts made H' '::;; (1' periods to advance .. '\\f c use' H give n pe rc ei ved ra mp age u pda te 1.;:0')/~. rL~~ nee. mat rix to genera te. age' forecas ts, (j~.,:r!-il~,~ thro ugh ~quation (7), Fractional ramp forecasts, j.t~,"f!(:: dX~ obtained ir n rumj- aze Iorecasts via Equ(~do:o '.;).. The .,.,.
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we- ~ HI study th 'effectiveness of ,Se'D FA, M' wi t h t he S,l 1]]U..[~l ted Ioreca sts. W e ~,j]11 ate six uJ pn «luci farnilie: with several rumps ~l,n'd study ;he covariance s between 'nN.{" , If the r~U11IH.i~s,r~ Fig, ~l). · fte
ln this section,

'W"~ briefly descri be the ,~1.1 rl~t.hm used to 'J and, J:]1:,I,~r gc gene i r:1te ,I" r ~a~~rt i Sl'~'''Y' d, 1a .~~:/~/ Ic r t ~ Ild·u/~ Fe 111J'1 y h '~
Sim: rlated Forecasts I"U~' .¥~-: I~-I~ ~
_ II
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l

400 '"30"0

j='_-~"'-"----"""'II"""-"_--F"==-----:r--=~r--~=---,;

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'=

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ln t he sec u nd ~l:' l.Cn11~.. t\~, H~d [11,\.'" .I.Jf("~IU rt ion .~~c,.;ht'n,~,'. a s'\:uau: thTl Iruclional Iorccust errur» 'in pr (J Lh.::[ d:~n.ands \cp·~n·cl· r I V ,H. ~.h~' I~q;. and il rc h dependent . 1 f prod l·!.1,..: ~ r·\'11' i Iy tDld '~,IL"(;'~'ll:; lc~v, W·~ ~ urnc ~h: n 1~'S
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,1

lhut 1 .~~,.p.rn'te~s,l'"n:g Linl-'s' "per jllh) lJf '~ hour r r {.~.{e(~t 1.3 hours r·u." ,(r1.fe(l. ), 0.] hours r.. r r 8 ..IClt.") and I hnur fpr , 8~',rc-+· }., The techu -~D gy ~ 't" ') IS ~1t r t .d uccd .d n l"r o d Lll: t .: u ru i y~: i1"1 '[ h t:: 6.'~ I J h s n1 'HlIL h ~ un ~ rt~·, ucccs so r tIt" "_, ) in the '(-- h ITI'(J11 h·.. Those i, ,~'L, t. a::.l"~lnl.'h1'.~les ~l(1r and fer+-) arc introduced on product
tt ' 'L. cullcd
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'~:H hand. l he 7 J'n_l months ..The (11001 is not LI'S.IJ.d· Ul ~'L'~1 h~'f( re in ~ I'll ~1 6 'I.. L~l ,-jolr'i~,..l . 1,1C I, he ~',~~, ty r~'~l~i ~h;'rn~uld' r 11 .:: ~tl'.f,I ~~j ~;-:I.rdd I us S~'(~H ]'I'f1l11 n~'n~i 'apacity .... demands [or Ct ,'r ure thfa· ht~'dIll,v multiplying pro Ju.c1 demand rt)[:L:C~ sts hv 'I')~~ c·c~sjn~ tin1,~~and summing, , ;tH . ~ .fil

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case, ln

~'I ue l U red ou r r

the basco cusc, we have relied t, n uu r intcrv i~·\~ \~q ~hl-l"l Pk~ l f1 t ~~ t.:. ~'l- 1'1.1: i' _ l 'n'll uc t lJ r in 1u~tf) .. s {~,"'~I\,~'ln)ild Ii rim and It iumly. :11 }9·:) V~/cS(i[ t he uvailablc ~ ll~ f()ret"~'s'[ h i:'ll r(, I ~, '(,(,J Ul,}:I' 'I h~1 I~~J:::I,I u, U nd t he r~~Tt"l:~'\S( horizun It II (,m ~fHhs, 'Wl~ -L''U~:~u]·n·l'd u pi;\ dul~1 L~fllli'ly
,\.:.o'l11illg lip
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• • ~ I

with

n .L.l.~11Cr.1cul ~ t ud \" 'il ro u nd ,:,~ ha sc ~

,SI. u't ina from a ~in u: I~ run:,~'-~_S l h i storv eoveri n g all ~.~'';'' r~,.~,-~d,s r :_ nnu'.m we randomly gencru te a sample i .. 5000' iudepeuucn fu ure p'r due'! demands 1"1 ~~.~r}~ f > n-~Ilr~ /
I

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va I.LlC~r ~IU perfonuu nee 1.11C;'1'~lUes arc derived ~ h~<s;l,·fu t II rc pro Ht Ul'l demn nds.

6,.4

.'::e

echn .. 'Illl!le~, stu v uctivc a.hll,o~1 "4 rnonths . .f,\JS() nl. tc that 011.(' (If the product nLin i"ly demand- ha~ u ~ incur ,[rc nd nf goi.u!: up \l. hcrens h t;;. '0 lhe r i·~.'l~~ l~ ,t ~.~'~ ~ ;,' g."' J. h ~1-~C'I "·11'1'·1:., ~u_ 'tl' ·ll r ,/",-,._ 11l:n ull ~,el Uf)1 ,is l:. 111111"- ~ ~C'd " ,I" I (l n..:pl, lca I~ ~ p,~ri! t )-11 FtcrHC~tliou~ lt~L ··c 11t'1,'", J'fLt~S lh;l'~ ,ar~ 2 nll ,~l'[h~ l:~p·arL '~';i~u'I\' 4 'shd\\,n,* lh.~ r~~rrn1,~~nc,~ r ,lh~11curl~,ti:c~ lga]n~t r L ~ Th_ey ~o·\j~r illC: !.;t-~ll'"[.~ rn~.ddl~ ~U1J ~~n(l('~Irl·h~ ranl'p~ ~Il iI.]',~.l~' ScI) _~ ~vI \~ ill1 '[h~' f. (l:'l[ U'l~lll i~,'t .vt'r:.;-iun ,'liM Lhe _.rVJ. "1, Igl1~ . ':\;' .',-~;.;\,M iL~~.H"i'h~' ~'v..~uaLt!LI t'll dill~rt:nl' ph,a:;i~s"r J u'H.: r~~hill .. '111 p'r-cd i~ti.n ~ l h l~ ~lL:'nt-1r~ va ri b! n~.~' r,: L d 0,1~ r,~lnl.r~, .l~~,'ach rcrht~ lLi,vn USc~ 60 Inl I1L~-.> If "nr~C"~L~~ bI'~-

11 pdu I,~ l:UVU riuncc In ... ri,'x usi Ilg, d~1 ~'I ,-,)l1f ',dl l~d, frcn1, ~~ u semiconductor rnunuluclurcr und h;"lSt:"'d ('UI" "tr ic" !\ ~ on Ih'UL In the h'l!owt~ b~H\t ,'n ,uv~rHe~ .... "\ ·,"r'\/}~ I H mnnth-, .~ ... ~ .

~",'I 1il~'J'J.Il.\·tl,Ilr:.1r£.:ul'i'oll Itlll'll ,Pi~t}'p,(JJ'ri(}11 In!'lIl'i:~:iif:!.5~ .. «srimatin» and decisio« makimr~ ,


flo' ,

new tech nph·}~.l\~.;.s intr _lU need.


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\J../c ~IPP~~'~ -I~l\ ~.'t 'anrl the Alkn.ntion and 'roportion '-s~t heunis lies t- ~ ~J·C nC't"l h: estiruutc t vuriances lor th -~ base ~,r" l1-:'1 ...:',,"iI~~. ',_ "1, l' :=;. \tr_IH"~ U, ~ u " .,r~~ ~-, ruuc 'Ii i~' 1"( 1'1 . win "tt: 'l01j''!;'~Sll re rrVt~r U II rep IlCH li 1I1. s, u nd ·C,"'·!Il ~ 1h~ _l11~ J: I /r ina! error in voriance t .J::':rinl(ilt~l,_l I urianc« - I~';U.'
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For the base case, il· ~,I ppears that [he Allocation ,SChCJ1"'le underestimates uhe variane .s: Its estimates U~';'I uniformly 70~~ of the trove variances, The Allocutun; Sch,Jl1.i( esti 1]11,te~}!;:;l:r.i'an~~sc r pr - dU~L fumil ies correctly, f but it ign ares correlations while disaggregating then _ 'by techno [o:g'K . I"J] fact dernaud« for succeeding tech n oloaies arene I~ra t ively ..,"a rrehucd 'SiI"' t he di sa ~c:_~IJ'tW-:._o.I.(I(;IL~U) v!rari """P..' 0" (n'~t;\g,J .;.~ ~t.' -Y\r..i, ,_~"'. ,~Lre underestimated, On the 0' her ·hi.Q1d" the l:J_I/,~(jp(}rtI~n :~Jt:eu.1. H ' .- veres l' 'I', In ,.I es l "I"";' ',~ t \i ,..) IJ' to 1- 'I O,Oj~. L";1, 'I"';U':"' ,_ J<' ~ va lued ~~::'," lead to ave rl la rge variance est irnates (:see,13(" uati an t ~6)); ·Wlf! '11': l\V ;~v-alll tc see ;he' business i11 plica tion S •. r 'i n: ieeu ra t¢, v"U~,i~lli~,-; st ima t ion us·~ e ng a simple capaci ty .~l·Ciq uis:i'l l' 0 111 rn e d el, 'Vvt e ~tu tty ~ix typ e -,J, [ O·'.'ls w h ose i~Jstullment .lce;!. times varv~ from 1: to 'I. ,2 n1' rnths, , U or ~ til ese toolx h:~lVGJ t he sa rue recess :I':l:r~~ tunes i., S '<too L, de's,C,']·'1 ]11. ~ he previ 0 u S ~ecti n. 'sing va ri~r£l:'. stima tes he'd Irom S:'D',-Al\1;o tools are bought to satisfy the true capaci ~ demand '!if\! it h, a pro bu hili ty '0 r 84·..1 ~X~'. ble 3 deY 'Ta piets actual J'rC\babJ,'_[Itie~ o r meeting the 'true capaci tv ,:~en1,a_nd \v.nY':11 G~lPHCi ties are selected ,iJcC'orUI1~ 1.0 Se'D 'F A. M: v "I,r.[" L I.l'C'~ e...[:i ill" 11es - fill iI,art;, CUll. put t ion s we re o done Ior Allocntion and Proportion. -~.'r .example. ,r tools 'with a ~ month lead time (,L T ;;;:;;J_i~ demand is met 76,·O(~{~, the time when capacity aequisitlon is b,a<ed on DC Allocation estimates, The target is ~4J '~L,,"'h,~- l;;,f:'ol~,(~ruo-n S~'lll-m« overes imate variance, sets eapacitylevels high, and ha iufreq 'bienL sb_,()rtagt::'~'1 . Si I1I~e"infrequen t shortages are achieved 'It the expense 10 r b ij) yi 'l;l,g extra ca paci ty .. -we also report the r' iio of expectec excess t O{ .~ cupae ity to .expe .. . d cia pa ci ty 1,-eq Lt:1 :rc',ct fs·e!e, Ta .. Ie 4.).. It mios nre converted to pe rcen 'L a gt".s ft r b rll:·u:cl a b'iI1't y. ...True . ,j S [h e e '_'pectCt:l~ ~xQle'S S C.Llp,((C it y' a CL:~I, _, al'ly re'quireci '~O nll~et Lh.e- Idlt;'111:~lntt ,Wi ttl '~l p<rc)bub'ilily nf 8 ~,.1!,~ '. A:s ·cxp·~i,;t_e:d" P,J·(JP·····~·ljll'n . r;1'lhi~'."I"JH) <:€Ins·~,-ten'll~-. j nS,iI" -11'ls .( , '1"1 -~,~~Ill ,~rr;l '~\-n· ~'J-l\ i"""!l.,p' _-·'t- i::-:'I'• 1\." I,~ ~[ .., ,_ ~': 'LI '~o ~u':·e~G·.Q·]I:d, w.e sl ud-V tht.: ,~ne,.,~t~ ihaccll L.'l~,e: estl111JI,tJOl1 ("f ~ pn r.e·ve]·lu~ prod ic·,L ~:OJ1" We n [H;;VSupp'ose th ',It prices re $..1
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manufacturer provided us V\ri: 'h an indus rial data set 01- annual forecasts with quarterly time buckets, and with .11 = :II-') q uarters. W:e 'have 5·years 0'( da '-L"'I ,,I.: L11 '~f'· [.J' J_v ..','8"...., W". '". s. U': 'lee,I ,I~' ..",",;,.'.-;.''d, .:,.'t f'F . rr: . srt dl .: l) 1I.1, pro:~._Ut;· ,dn~l,I.J,e:~ ,a ,d, 'I~'~' " ."1 " a 11d f ve tee hn l "gie~~,. wever, no t all tee h nok g:i: es at re I~I:: used on ;,1U r·,u·]' ra. Ill, i lies In, all time periods, Fizure 8· . . _ ¢'IA depic s nd It/'t; A sinzle curve in :F:i-:g~ 8 represents . ~, 1111.-Ii .."~. • \' ... ." I :"L' -Tl ~~IIl,,[l~r. ·~·~!t It.ll,~ /d'. t ,Ll~( 'I"" U' ~~s ~,rat ~ i:.'" to 1: ,".s + 'H' ~ .
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m t e A~~'s~[ OJ] ((\.J l req U ires .1. h..([, fa rn:i,~.) 'l nd r~CIeei 'e~d e .,~ pa ri"'UH ~ the IH.~ :r.·U~1 sh lW·;;, I[ 11 performa nee' u f i[ he: mpti a!l~' upda L.l~S reach of le ngth [\;vo') ha \it: 1l1.CtUl zero. ]'n this Frequentlst versi .'11 or S'C·,·.--A·M .. test, the sample size is i, :1. I{, r lurni ly u pdates and bet \-vc,' n 'or Bavesiun es rirnu tion we use 'l ht Inverted- Wishart I') and ) I lor per 'ei ed ,:l~ updutes. ··ur tests lind _l:ul.r c .. P riI r s. h "I r . I·.\,' " 1- ~, I! 'W':'i l h l hi,' p' r i l r \~!II:liJs·-L '[ he ycar-o u 't fa 111,ily updates ~un bi: ised. .' 1Ine~yl~a It] '1 fl:~~, i~);ex] ected value of [he' updates equal to zero. lnrervlew rt'~l ..r, l r-.Ll ~,~.,vildiri U11, '..II-Inl. Rou nel,Y ~ IlHJO\:'. In.'d~.ate: .rI""" ~ !~ updates have negative bias, In uher \~JJ~·f~S,.rl:II,'I11il:y r'OI·,I.:!· .y,.. 'l·' ~"d.. ~'~d.. U I I: ,au .1, 7';;1; '" JC~:l e, []~,h, casts are optimist ic ,ini ll:'111 v I;.lnd the", are lecreased t·, p~actiti . ners ha ve I~I n,!.ir'ly gJ o.)-r~~Si,p ,!" variances, but realistic i 'vel·s, ~; veur before the detnan 1 .~~ '~1 - served .. r- ~i.~lJ,e .1'uAer$titlld,i,]],c1.~ nr e svu riz nces .. Thus w ~"I!Ie ted a .. tes ts -fiJu;l pcrcei e ,I a e f_,·!'rtC'.~I~s!:t p.isJIII·· '/c·l}. biased, 'i _~"," diagonal matris Ior' the . spected value .. L,.. '~·U di;'L~>nal '. .' ]e'[l1 .11.' .: f rag iv e n ra..111~] ;1re eo 11. Hl, 111!C'l ni na lhal j. n the 1 y initially rump schedules are overly pessimistic, In sum· ..]. I'" . 1 m: rry.~ r 1rec ust da l~l indi (,~i:U!'~ t iu SC1:1 fu m i~i II P d u [e s:·an d P no r, ~.~_ vunu net ().~I. t ie ioreca -I. et rO.L~. (f )E)~' o]: h,l J rs a Y nc U' '[ 1 .1., perceived al!~" updates. See Appendix ".~for discussi In on linea r l ~ rea ~,;l' b 'u nc I~-' -~,'. I~1 '1. 1M . ~'1'" 'I E' II:". __' man' 0 r' ~ -h(· '\\' [·0 ad H p L :,'IL.; t r"'' ~~',' 1·1 r these "·l.~a'L! Biases' .. in LJ]1'·1 f=J:aSCI on the ~a~t L\~·· T'\V'~' . fTuhle 'Iflj we : bserve tluu d i j'[S· F requ ~n l.L I ::.;~'~:I -.. ', 1\11 .' U L P rf '1-:n1 ~ :B~l.y,e's.jun':·e.D F ,'. M,. I::,IU r _::'h· ''ie. . " f l he -':~ i.':'1" adv .t~l~ j, J aJr€Cl. sd 1',11 ~ ~ vesian 'oe I) . 'II:· r\ ,",dl 'IJ1: 'prac• ,t"'.. " mu 'ny 0, -I'~ ,.,~. '." ~ova (hll, ',1ces"" are ,h urge. S:····. 1: j\ ~ ' '. .' ~. ,'. : ,t~1.e ":oIl .1 C~.~,.." \._me re exact prior 'W Id s:. lve that prnblem, but the '( m; :\} L," hard l' ,. L:'. me bv in oractlce, I~ ~U]]1111HJ"Y .. ~, . I ~--.,,. S t " J .ll'l· ,'t ,,",,1,,'. • Having justified ~".t!DF.~. \1 assumprions. we us thf J sugg.· -..... 11 ,,1, L 1:1-., Ltt::.n,...... ,3,' ·1:" M" ;'It.: U:'SL:U a·s J'',ung a: - .I l/e~ i rulu: triul du l~J' t test how S _I" PJ\ M: respondst lc ,: er 'c' n ve r ~, s. 'W h ~.J] ] l d· - e s n t con ver ae LI S:'\ "B"~vesia n t · u p- da te I'rcLILI encles, We l!..J1 S ider l h rce cu: es wit h lhe 1·::e'Dv..- M:,~with sumple-independen l priors. Table fr als 'Il' IIc"~\fi' g j:t 'Cl:a~t u'pd~H f"rcq llencie,s- :11 d '1 inle' blH;k.:" t~: ind ic; .tes lha L i 11.:·~. easi ng r 'r~,c..ts·· U P~lI me rre··q uency f gO:ll1 g c '(l'i nnuaL .·Iuat'lerly -' (.SClll iaJ1 n uaL ': uarter~y , an (Jm -'1'11 ,\ nnuaJI L. 1,'lu~l't~rly " ~~,In'( r1,uY'~'MhHl .~,e.D,~ ,#\'-"':1 t.' ,(': u~:lrlerIY,:·.:i U~~ t!:~'-:Iy'). 1,'l.·C ~s'thlln tt' '~i' ,J . '--'nfr ell 1 tJn:: r: '~11 p erfi;f111 b,Lh~t. j-nd us'l ri~ll,dt~ I. "~' f( I)" l1]il. it: / .1\ l i'1 J B l r ,I i~'.H, "t, nd. C{):nlpu te' ',P (r~ a~ in, T,H l~l~ 5 ~ 1,11. aU, .~.~~ .\vt:' ~··un <:' cD F :r\j. ~t. 1 :';I;!s". ( . ,. o'n"'Ijj'Ju'~Qc'n-:\~(i L h 1l === '.~ qua rt."·'r~ ;'Ul11t ,~:n LI a r(.t; '[s '" ~ .' :r:: l:a'~.[ hJs~. r ~ . ~(1 (J ~n l h t!' 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