TRUCK FORECASTING

WITH TIME SERIES

ANALYSIS: A CASE STUDY
OF THE BLUE WATER
BRIDGE

University of Wisconsin Milwaukee

Paper No. 11-5

National Center for Freight & Infrastructure Research & Education

College of Engineering
Department of Civil and Environmental Engineering
University of Wisconsin, Madison

Authors: Jing Mao and Alan J. Horowitz

Center for Urban Transportation Studies
University of Wisconsin Milwaukee

Principal Investigator: Alan J. Horowitz

Professor, Civil Engineering and Mechanics Department, University of Wisconsin Milwaukee

December 22, 2011

Truck Forecasting with Time Series Analysis: A Case Study of the Blue Water
Bridge

INTRODUCTION
This document contains images of all slides in a course module about the use of time
series techniques for truck forecasting. The techniques are illustrated with data from the Blue
Water Bridge between Michigan and Ontario. This presentation is available upon request to
Alan Horowitz, horowitz@uwm.edu.
 12/22/2011

Truck Forecasting with Time Series

Analysis: A Case Study of the Blue
Water Bridge

Prepared by
Jing Mao
Alan J. Horowitz

Outline

Introduction
Data Collection
Methodology
Conclusion

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Blue Water Bridge

Location
The Blue Water Bridge spans the Saint Clair River, and carries
international traffic between Port Huron, Michigan and Point
Edward and Sarnia, Ontario. Located near interchange of I-94
and I-69, the bridge forms a critical gateway linking Canada
and the United States.

Blue Water Bridge

Lane characteristics
The original Blue Water Bridge, opened in 1938 and
renovated in 1999, is a three-lane westbound bridge.
The second Blue Water Bridge, which carries three lanes
of eastbound traffic, is an impressive modern bridge
opened in 1997.

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Purpose of the Study

Forecasting the eastbound and westbound

monthly truck volume of blue water bridge from
2011 to 2013
Applying the different time series models and
select the best one for forecasting

Data Source
Dependent variables
Blue water bridge eastbound/ westbound truck volume
Independent variables
o Michigan population (why freight moves)
o Ontario population (why freight moves)
o U.S. GDP and population (why freight moves)
o Approximate Michigan GDP (derived from U.S. GDP
by the proportion of Michigan population and U.S.
population)
o U.S. all grades all formulations retail gasoline fuel
price (major cost of freight)
o North American Free Trade Agreement (NAFTA)
(why freight moves)
o September 11 attacks (why freight does not move)

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Descriptive Statistic of Dependent

Variables
Westbound and eastbound truck volume data from Jan
1984 to Dec 2010 by each month

Westbound Eastbound
30000 30000
25000
25000
20000
20000
15000
15000
10000 Westbound
10000 Eastbound
5000
5000
0
0
Nov-84

Dec-86

Oct-87
Jan-84
Jun-84

Apr-85
Sep-85

May-87
Feb-86
Jul-86

Nov-84

Dec-86

Oct-87
Jan-84
Jun-84

Apr-85
Sep-85

May-87
Feb-86
Jul-86
Westbound truck volume Eastbound truck volume
from Jan 1984 to Dec 1987 from Jan 1984 to Dec 1987

Descriptive Statistic of Independent

Variables
Michigan and Ontario population data from Jan 1984 to
Dec 2010 by each month

Michigan Ontario Population(million)

Population(million) 16.0000
10.200 14.0000
10.000
12.0000
9.800
9.600 10.0000
9.400 8.0000 Ontario
9.200 Populati
6.0000 on(mil
9.000 Michigan
4.0000
8.800
8.600 2.0000
8.400 0.0000
Jan-84
Jul-86
Jan-89
Jul-91
Jan-94
Jul-96
Jan-99
Jul-01
Jan-04
Jul-06
Jan-09

Jan-84
Jan-86
Jan-88
Jan-90
Jan-92
Jan-94
Jan-96
Jan-98
Jan-00
Jan-02
Jan-04
Jan-06
Jan-08
Jan-10

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Descriptive Statistic of Independent

Variables
US GDP data from Jan 1984 to Dec 2010 by each month
and yearly U.S. population data

US GDP(billion)
6000.000
U.S. Population (million)
5000.000 350

300
4000.000
US GDP

250
3000.000
200
2000.000 US GDP(billion) Population
150
1000.000 100
0.000 50
Mar-90
Jan-84
Feb-87

Apr-93
May-96
Jun-99
Jul-02
Aug-05
Sep-08

1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010

Approximate Michigan GDP

Computing the ratio of Michigan population and U.S. population

Computing Michigan GDP by applying the ratio to Michigan GDP
and U.S. GDP

Michigan GDP = Ratio * U.S. GDP

Ratio = Michigan population / U.S. population

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Descriptive Statistic of Independent

Variables
Michigan GDP data and U.S. all grades all formulations
retail gasoline fuel price data from Jan 1984 to Dec 2010
by each month
U.S. All Grades All Formulations Retail
Gasoline fuel Price (Dollar per Gallon
Michigan GDP(billion)
based current year)
180
160 4.500
140 4.000

120 3.500

100 3.000

Fuel price
2.500 U.S. All Grades
80 Michigan
GDP(billion) 2.000 All Formulations
60 Retail Gasoline
1.500
40 fuel Price
1.000
20
0.500
0
0.000
Jan-84

Jan-89

Jan-

Sep

May
Mar
Jan-

Sep

May
Mar
Jan-

Sep
Jul-86

Jul-91
Jan-94
Jul-96
Jan-99
Jul-01
Jan-04
Jul-06
Jan-09

Nov

Jul-

Nov

Jul-

Nov

Other Data
NAFTA
o The North American Free Trade Agreement or NAFTA is
an agreement signed by the governments
of Canada, Mexico, and the United States, creating a
trilateral trade bloc in North America. The agreement
came into force on January 1, 1994. It superseded
the Canada United States Free Trade
Agreement between the U.S. and Canada.
September 11
o The September 11 attacks could also be a factor to
influence the truck volume within that month.

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Time Series Models

Central Moving Average

Growth Factor
Central Moving
Average

Exponential Smoothing
Linear Regression Growth Factor

ARIMA
o Box-Cox Transformation Exponential
Smoothing

Linear Regression

ARIMA

Central Moving Average

Central moving average is a moving average such that
time period is at the center of the N time periods used
to determine which values to average.

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Central Moving Average

Westbound and Eastbound moving average data from
Jul 1984 to Aug 2010

Westbound Moving Eastbound Moving Average

Average 90000
100000 80000
90000
70000
80000

Truck Volume
Truck Volume

70000 60000
60000 50000
50000 40000 Series1
40000 Series1
30000 Series2
30000 Series2
20000 20000
10000 10000
0
0
Mar-96

Dec-04
Nov-07
Jun-87
May-90
Jul-84

Apr-93

Feb-99
Jan-02

Dec-86

Oct-91
Mar-94

Nov-03
May-89
Jul-84

Aug-96
Jan-99
Jun-01

Apr-06
Sep-08
R square 0.956 R square 0.971

Seasonal adjustment factor

Seasonal adjustment factor can be used to improve
accuracy of truck volume forecasts

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Growth Factor

Linear growth:

F(n) = Constant + AGF * (n)

F(n): forecast volume

AGF: average growth factor
n: the number of months from the first
observation

Growth Factor
Determination of constant and AGF from the linear
regression
o Tools / Add-ins / Analysis Tool Park
o Tools / Data Analysis / Regression
o Independent variable: month
o Dependent variable: westbound truck volume (partial
initial data)

Constant:13767
AGF: 119

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Growth Factor Forecasting

F(n)=13767+119*n

Partial results with growth factor forecasting

Forecasting Results with All Initial Data

Westbound Forecasting
100000
Truck Volume

80000

60000

40000 Actual data R Square 0.915

20000 Forecasted data

0
Mar-84
Dec-85

Dec-99

Dec-06
Sep-87
Jun-89
Mar-91
Dec-92
Sep-94
Jun-96
Mar-98

Sep-01
Jun-03
Mar-05

Sep-08
Jun-10

Eastbound Forecasting
90000
80000
Truck Volume

70000
60000
50000 R Square 0.919
40000 Actual data
30000
20000 Forecasted data
10000
0
Mar-84
Dec-85

Dec-92

Dec-99

Dec-06
Sep-87
Jun-89
Mar-91

Sep-94
Jun-96
Mar-98

Sep-01
Jun-03
Mar-05

Sep-08
Jun-10

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Growth Factor Forecasting with

Central Moving Average Series

F(n)=14291+230*n Partial central moving average truck volume

Partial central moving

average series

Forecasting Results with All Smoothed

Data
Westbound Forecasting
100000
Truck Volume

80000
60000 R Square 0.935
40000 Moving Average
20000 Forecasting
0
Sep-84

Dec-88

Oct-91
Mar-93
Feb-86
Jul-87

Jun-97
Nov-98
Apr-00

Oct-08
Sep-01

Dec-05

Mar-10
Feb-03
Jul-04
May-90

Aug-94
Jan-96

May-07

Aug-11

Eastbound Forecasting
80000
70000
R Square 0.940
Truck Volume

60000
50000
40000
30000 Moving Average
20000 Forecasting
10000
0
Sep-84
Jan-86
May-87
Sep-88
Jan-90
May-91
Sep-92
Jan-94
May-95
Sep-96
Jan-98
May-99
Sep-00
Jan-02
May-03
Sep-04
Jan-06
May-07
Sep-08
Jan-10
May-11

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Comparison

Comparing R Square of Growth factor with initial

data and moving average(smoothed) data

R Square Initial data Moving average

data
Westbound 0.915 0.935
Eastbound 0.919 0.940

Growth Factor

Compound growth
F(n)=Constant*AGF(n)
o If there are two years
1
AGF = F2
Y2 Y1

F1
Where F1 is the freight flow in year Y1, F2 is the
freight flow in year Y2
o If there are more than two years, AGF can be found
from the linear regression

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Growth Factor
Determination of constant and AGF
from the linear regression
o Tools / Add-ins / Analysis Tool Park
o Tools / Data Analysis / Regression
o Independent variable: month
o Dependent variable: westbound truck
volume expressed as natural logarithm
(partial initial data)
o Constant = EXP (intercept)
AGF = EXP (x-variable coefficient)

Constant:13745
AGF: 1.008

Growth Factor Forecasting

F(n) = 13745*1.008n

Partial results with compound regression forecasting

13
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Exponential Smoothing

Model formulation:

where
St: exponentially smoothed value for time period t
St-1: exponentially smoothed value for time period t-1
xt-1 : actual time series value for time period t
: the smoothing factor, and 0 < < 1

Example

= 0.7
St = 0.7xt-1 + (1-0.7)St-1

0.7*12878+0.3*13253

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Exponential Smoothing

Smoothing factor
o The larger is, the closer the smoothed value will
track the original data value. The smaller is, the
more fluctuation is smoothed out.
The determination of smoothing factor
o Graph fitting
o Mean squared error (MSE)
Smoothing factor assumed (0.3, 0.5, 0.7)

100000
80000
60000
Initial data
Alpha=0.3 40000
20000 Exponential
0 smoothing(alpha=0.3)
May-85
Feb-84

Aug-86
Nov-87

May-90
Feb-89

Aug-91
Nov-92

May-95

May-00
Feb-94

Aug-96
Nov-97
Feb-99

Aug-01
Nov-02

May-05
Feb-04

Aug-06
Nov-07

May-10
Feb-09

MSE=27875534
100000
80000
Alpha=0.5 60000
40000
Initial data
20000
0
Oct-86

Oct-90

Oct-94

Oct-98

Oct-02

Oct-06

Oct-10
Feb-84
Jun-85

Feb-88
Jun-89

Feb-92
Jun-93

Feb-96
Jun-97

Feb-00
Jun-01

Feb-04
Jun-05

Feb-08
Jun-09

MSE=25483163

100000
80000
Alpha=0.7 60000
Initial data
40000
20000
Exponential
0 smoothing(alpha=0.7)
May-85

May-90
Feb-84

Aug-86
Nov-87
Feb-89

Aug-91
Nov-92

May-95

May-00
Feb-94

Aug-96
Nov-97
Feb-99

Aug-01
Nov-02

May-05
Feb-04

Aug-06
Nov-07

May-10
Feb-09

MSE=24306420

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Westbound Truck Volume Forecasting

Alpha 0.3 0.5 0.7
MSE 27875534 25483163 24306420
When alpha=0.7, MSE is smallest, so we select alpha=0.7 to
forecast westbound truck volume
100000
90000
80000
70000
60000
50000
Initial data
40000
Forecasting
30000
20000
10000
0
Oct-88
Dec-89

Oct-95
Dec-96

Oct-02
Dec-03

Oct-09
Dec-10
Feb-84
Apr-85
Jun-86
Aug-87

Feb-91
Apr-92
Jun-93
Aug-94

Feb-98
Apr-99
Jun-00
Aug-01

Feb-05
Apr-06
Jun-07
Aug-08

Linear Regression
Model
Y = f(x1,x2,,xn) = b0 + b1x1 + b2x2 + + bnxn
Dataset with initial truck volume(partial):

16
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Initial Analysis

Westbound truck & Michigan Westbound truck & Ontario

population scatterplot population scatterplot

Initial Analysis (contd)

Westbound truck & US GDP Westbound truck & Fuel price

scatterplot scatterplot

17
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Initial Analysis (contd)

Westbound truck & NAFTA Westbound truck & September 11

scatterplot scatterplot

Regression Model Establishment with

SPSS
Select Analysis-Regression-Linear
Put Westbound Truck as dependent variable and other
variables as independent variables

Select Stepwise as
analysis mode
Click OK

18
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Results Analysis

US GDP NAFTA,
Sep.11

The order of
regression equation

The name of entered variables

The name of removed variables

The basis of entering and

removing variables

Common Statistic

Adjusted R Square=0.942 indicates

model 3 should be selected as
regression model

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Analysis of Coefficients

Regression equation:
Y=652201.511+83171.959x110177.394x2+4889.856x3
x1: Michigan population(million)
x2: Ontario population(million)
x3: Fuel price(current dollar)

Independent Variables Forecasting

Forecasting the independent variables (Ontario population,
US GDP, Fuel price ) with linear regression, respectively.
US GDP
Ontario population
Forecasting(billion)
forecasting(million) 6000
14 5000
12 4000
10 3000
8 2000
6 1000 Forecasting
4 0
Forecasting
Jan-84
Jun-87
Nov-90
Apr-94
Sep-97

Dec-07
Feb-01
Jul-04

2
0
Oct-86

Oct-97

Oct-08
Jan-84

Jul-89
Apr-92
Jan-95

Jul-00
Apr-03
Jan-06

Fuel price forecasting(Dollar

per Gallon)
3
2
1
0 Forecasting
Nov-85

Mar-93

Nov-96

Mar-04

Nov-07
Jan-84

Sep-87

May-91
Jul-89

Jan-95

Sep-98

May-02
Jul-00

Jan-06

Sep-09

20
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Michigan Population and GDP Forecasting

Results of the 2010 headcount show the number of

Michigan residents fell by 0.6 percent since 2000

=9.88*0.94

Forecasting the Michigan GDP

Michigan Population
Michigan GDP = * US GDP
US Population

Independent Variables Forecasting Results

Independent variables forecasting results from

Feb 2011 to Dec 2013
Partial forecasting results

21
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Regression Forecasting
Westbound truck forecasting results from Feb
2011 to Dec 2013 with the multilinear regression
model

Partial forecasting results

Regression Model Establishment with

EXCEL
Inputting the dataset
Click Anova Tools Regression

y = -652211.746 +83173.846*Michigan -10178.161*Ontario

+4890.563*Fuel Price

22
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Forecasting Results

Plot of initial value and forecasting value

100000
90000
80000
70000
60000
50000
Initial data
40000
Forecasting
30000
20000
10000
0
Mar-86

Oct-93
Nov-94
Dec-95

Mar-99

Oct-06
Nov-07
Dec-08
Jan-84
Feb-85

Apr-87
May-88
Jun-89
Jul-90
Aug-91
Sep-92

Jan-97

May-01
Feb-98

Apr-00

Jun-02
Jul-03
Aug-04
Sep-05

Jan-10
Feb-11

Linear Regression with Smoothed

Series(Central Moving Average Series)
Select Analysis-Regression-Linear
Put Westbound Truck as Dependent variable and
other variables as independent variables

Select Stepwise
as analysis mode
Click OK

23
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Regression Model Selection

Linear Regression Equation

Y = -562356.809 +75631.264*Michigan -13266.173*Ontario

+8.828*US GDP(billion) -1680.692*NAFTA

24
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Forecasting with EXCEL

Plot of westbound smoothed truck volume
and forecasting volume
90000

80000

70000

60000

50000

40000 Westbound

30000 Forecasting

20000

10000

0
Nov-86

Mar-89

Nov-93

Mar-96

Nov-00

Mar-03

Nov-07

Mar-10
Jul-84
Sep-85

Jan-88

May-90
Jul-91
Sep-92

Jan-95

May-97
Jul-98
Sep-99

Jan-02

May-04
Jul-05
Sep-06

Jan-09

May-11

Regression Forecasting with Seasonal

Adjustment Factor

Seasonal adjustment
factor data is derived
from central moving
average series

25
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Comparison

Comparing R Square of linear regression with

smoothed data and unsmoothed data

R Square
Regression with 0.942
unsmoothed data
Regression with smoothed 0.984
data

Linear regression with smoothed data has a

higher R square, this model can better fit the
forecasted and actual value

Linear Regression
Michigan GDP as one of the independent
variables instead of Michigan population and
U.S. GDP

26
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Forecasting
Y=155753-20609*Ontario population(million) -13133*Fuel
price+13033*NAFTA+1294*Michigan GDP(billion)
R Square: 0.989

Comparison
Comparing R Square of linear regression with
the independent variable of Michigan GDP and
the independent variables without Michigan GDP
R Square
Regression with Michigan 0.984
GDP
Regression without 0.989
Michigan GDP

Linear regression with Michigan GDP has a higher

R square, this model can better fit the forecasted
and actual value

27
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ARIMA

ARIMA(p,d,q)
o Auto-regressive model
p is the number of autoregressive terms
o Integrated model
d is the number of nonseasonal differences
o Moving average model
q is the number of lagged forecast errors in the
prediction equation

Auto-Regressive Model

The definition of autoregressive(AR) model

o Takes advantage of autocorrelation

1st order - correlation between consecutive values
2nd order - correlation between values 2 periods apart

pth order Autoregressive models

Yi = A 0 + A1Yi-1 + A 2 Yi-2 + L + A p Yi-p + i

Random Error

28
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Autoregressive Modeling Example

Develop the second order Autoregressive model

Excel Output
Coefficients
Intercept 13273 Yi = 13273 0.25Yi 1 +0.128Yi 2
X Variable 1 -0.25
X Variable 2 0.128

ACF and PACF

ACF
covariance at lag k
k = k =
0 variance

=
(Y Y )(Y Y )
t t +k

(Y Y )
t
2

k : The ACF at lag k.

PACF
o The Partial Autocorrelation Function (PACF) is similar to the
ACF, however it measures correlation between observations
that are k time periods apart, after controlling for correlations
at intermediate lags.

29
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Autocorrelation
Using initial truck series to make autocorrelation
with SPSS
o Putting transformed data as variable
o Click Autocorrelation and Partial autocorrelation
and input maximum number of lags as 24
o Click OK

Autocorrelation of Initial Truck Series

30
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Identifying the Order of Differencing

A stationary series
o Constant mean
o Constant variance
o Constant autocorrelation structure
Westbound truck volume
100000
90000
80000
Truck Volume

70000
60000
Nonstationary
50000 The variability is changing
40000
Series1
30000
20000
10000
0
Mar-87
Oct-88

Dec-91

Oct-07
Nov-99

Mar-06

Dec-10
Jan-84
Aug-85

May-90

Feb-95

Jan-03
Jul-93

Sep-96
Apr-98

Jun-01

Aug-04

May-09

Identifying the Order of Differencing

Making the first differencing (d=1)

Differenced Data
25000

20000

15000

10000
Truck Volume

5000
Series1
0
Nov-87

Nov-92

Nov-97

Nov-02

Nov-07
May-85

May-00

May-05

May-10
Feb-84

Aug-86

May-90
Feb-89

Aug-91

May-95
Feb-94

Aug-96

Feb-99

Aug-01

Feb-04

Aug-06

Feb-09

5000

10000

15000

20000

The series appears stationary, So we decide the d=1

31
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Removing the Changing of Variability

Although the series appear stationary by

differencing once, the variability is still changing
over time. Transformation is considered for
series in which variance changes over time and
differencing does not stabilize the variance.

Box-Cox Transformation

Transformation formulation

Where is transform parameter

32
 12/22/2011

Transform with EXCEL

Inputting the westbound truck volume (undifferenced)
in EXCEL
Click QI Macros Anova Tools Box cox
Inputting the transform parameter lambda with -0.7, -
0.5, -0.3, 0.1, 0.3, 0.5, respectively
Dividing the transformed data into 3 components by
time and computing the standard deviation of every
component

Order of components Time interval

1 Jan 84-Apr 93
2 May 93-Aug 02
3 Sep 02-Jan 11

Identifying Lambda
Lambda=-0.7 Lambda=-0.5 Lambda=-0.3
0.0003 0.006
Stand Deviation

Stand Deviation
Stand Deviation

0.0015
0.0002 0.004
0.001
0.0001 Series1 0.002 Series1
0.0005 Series1
0 0
0
1 2 3 1 2 3
1 2 3

Lambda=0.5 Lambda=0.1
Lambda=0.3 26
0.1
Stand Deviation
Stand Deviation

2.5 25
Stand Deviation

2 0.08
24
1.5 0.06
23
Series1 0.04 Series1
1 Series1 22
0.5 21 0.02
0 20 0
1 2 3 1 2 3 1 2 3

When lambda is 0.3, the stand deviation of the three parts

is most smoothing, we select lambda as 0.3.

33
 -3
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
Feb-84
Jan-85
Dec-85
Nov-86 Truck Volume
Oct-87

0
5
10
15
20
25
30
35
Sep-88 Jan-84
Aug-89 May-85
Jul-90 Sep-86
Jun-91 Jan-88
May-92 May-89
Apr-93 Sep-90
Mar-94 Jan-92
Feb-95 May-93
Jan-96 Sep-94
Dec-96 Jan-96
Nov-97 May-97

Oct-98 Sep-98
Jan-00
Sep-99

Seasonal
May-01

Stationary
Aug-00
Sep-02
Jul-01
Jan-04
Jun-02
Transformed data

May-05
May-03
Sep-06
Apr-04
Jan-08
Mar-05
May-09
Feb-06 Sep-10
Jan-07

Transformed and differenced data

Dec-07
Nov-08
Oct-09
Series1

Sep-10

Series1
Transforming with Differenced Data
Transforming with Undifferenced Data

34
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Identifying AR(p)
Identify the numbers of AR by looking at the
autocorrelation function (ACF) and partial
autocorrelation (PACF) plots of differenced series

AR(p)
ACF Tails off
PACF Cuts after p

Moving Average Model

The definition of moving average(MA) model

: the correlation coefficient

: the series under investigation
: the residual
MA(2) model

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Identifying MA(q) Model

Identify the numbers of MA by looking at the

autocorrelation function (ACF) and partial
autocorrelation (PACF) plots of differenced
series

MA(q)
ACF Cuts after q
PACF Tails off

Differencing=0

ACF falls to zero very slowly

indicates that non-seasonal
differencing is required

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Differencing=1

ACF cuts off to zero at

lag 2 sharply, no non-
seasonal differencing is
needed

PACF falls to zero slowly

and ACF cuts off to zero
after lag 1,indicating
MA(1) is needed

Identification of ARIMA(p,d,q)

P=0, d=1,q=1

The potential model is ARIMA(0,1,1)

(1B)Yt=(11B)at

t: indexes time
B: the backshift operator, BYt= BYt-1
1: the nonseasonal moving average coefficient
at: the random error

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Model with Seasonal Components

Seasonal model:

where s is seasonal cycle

P: the order of seasonal AR model
D: the order of seasonal differencing
Q: the order of seasonal MA model

Identification of P,D,Q

Differencing: 0

ACF falls to zero slowly at lags 12

and 24, indicating seasonal
differencing is needed

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ACF and PACF of Seasonal Differenced

Series
Differencing : 1

ACF cuts off to zero at lags 12 and 24 indicates no more

seasonal differencing is needed.
Both ACF and PACF do not show to cut off to zero at lags 12
and 24, indicating no seasonal AR model and seasonal MA
model are needed.

Identification of Final ARIMA(p,d,q)(P,D,Q)s

p=0,d=1,q=1
P=0,D=1,Q=0
ARIMA(0,1,1)(0,1,0)12

(1B)(1B12)Yt=(11B)at

t: indexes time
B: the backshift operator, BYt= BYt-1
B12: the seasonal backshift operator, B12Yt= BYt-12
1: the nonseasonal moving average coefficient
at: the random error

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Model Building with SPSS

R square : 0.971

Residual Graph

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Forecasting

Forecasting Results (Partial)

Forecasts of truck volume

derived from the forecasts Forecasts of transformed series
of transformed series

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Conclusions

Growth factor
Exponential smoothing
Linear regression
ARIMA

Conclusions (contd)

Growth factor
o Advantages
Simple and easy to understand
Considering the linear and nonlinear trend of the
historical data
o Disadvantages
Neglecting the effects of cyclical or seasonal
components
Increasing the time

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Conclusions (contd)

Exponential smoothing
o Advantages
Including both linear and nonlinear
Structural view of the data that include level, trend,
seasonality, and events
o Disadvantage
The forecast is constant for all future values

Conclusions (contd)

Linear regression
o Advantage
Considering the characteristic of independent
variables and the relationship between independent
variables(economical and political factors) and
dependent variables
o Disadvantage
Difficult to determine the trends of every
independent variable

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Conclusions (contd)

ARIMA
o Advantage
The comprehensiveness of the family of models
o Disadvantages
ARIMA identification is difficult and time consuming
ARIMA may be difficult to explain to others
Models that perform similarly on the historical data
may yield quite different forecasts
Empirical
o Although there are more disadvantages than
advantages, the advantages may still outweigh
the disadvantages.

Reference

1. Daniel Beagan, Michael Fischer, Arun Kuppam.

Quick Response Freight Manual II (2007).
2. Alan Pankratz. Forecasting With Univariate
Box-Jenkins Models (1983).
3. R.M.SAKIA. The Box-Cox transformation
technique: a review (1992).

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