Forecasting

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Forecasting
Forecasting is the process of making statements about events whose actual outcomes (typically) have not yet been observed. A commonplace example might be estimation of the expected value for some variable of interest at some specified future date. Prediction is a similar, but more general term. Both might refer to formal statistical methods employing time series, cross-sectional or longitudinal data, or alternatively to less formal judgemental methods. Usage can differ between areas of application: for example in hydrology, the terms "forecast" and "forecasting" are sometimes reserved for estimates of values at certain specific future times, while the term "prediction" is used for more general estimates, such as the number of times floods will occur over a long period. Risk and uncertainty are central to forecasting and prediction; it is generally considered good practice to indicate the degree of uncertainty attaching to forecasts. The process of climate change and increasing energy prices has led to the usage of Egain Forecasting of buildings. The method uses Forecasting to reduce the energy needed to heat the building, thus reducing the emission of greenhouse gases. Forecasting is used in the practice of Customer Demand Planning in every day business forecasting for manufacturing companies. The discipline of demand planning, also sometimes referred to as supply chain forecasting, embraces both statistical forecasting and a consensus process. An important, albeit often ignored aspect of forecasting, is the relationship it holds with planning. Forecasting can be described as predicting what the future will look like, whereas planning predicts what the future should look like.[1] There is no single right forecasting method to use. Selection of a method should be based on your objectives and your conditions (data etc.).[2] A good place to find a method, is by visiting a selection tree. An example of a selection tree can be found here.[3] .

Categories of forecasting methods
Time series methods
Time series methods use historical data as the basis of estimating future outcomes. • Rolling forecast is a projection into the future based on past performances, routinely updated on a regular schedule to incorporate data.[4] • Moving average • weighted moving average • Exponential smoothing • Autoregressive moving average (ARMA) • Autoregressive integrated moving average (ARIMA) e.g. Box-Jenkins • • • • Extrapolation Linear prediction Trend estimation Growth curve

• Regression analysis using linear regression or non-linear regression • Econometrics • Autoregressive moving average with exogenous inputs (ARMAX) Judgmental methods Judgmental forecasting methods incorporate intuitive judgements. opinions and subjective probability estimates. and F is the forecast for period t. For example.Forecasting 2 Causal / econometric methods Some forecasting methods use the assumption that it is possible to identify the underlying factors that might influence the variable that is being forecast. If the causes are understood. Y is the actual value at period t. sales of umbrellas might be associated with weather conditions. projections of the influencing variables can be made and used in the forecast. • • • • • Composite forecasts Surveys Delphi method Scenario building Technology forecasting • Forecast by analogy Artificial intelligence methods • Artificial neural networks • Support vector machines Other methods • • • • Simulation Prediction market Probabilistic forecasting and Ensemble forecasting Reference class forecasting Forecasting accuracy The forecast error is the difference between the actual value and the forecast value for the corresponding period. where E is the forecast error at period t. Measures of aggregate error: .

Flood forecasting and Meteorology • Transport planning and Transportation forecasting • Economic forecasting • Egain Forecasting • Technology forecasting • Earthquake prediction • Land use forecasting • Product forecasting • Player and team performance in sports • Telecommunications forecasting • Political Forecasting • Sales Forecasting . Accurate forecasting will help retailers reduce excess inventory and therefore increase profit margin. Accurate forecasting will also help them meet consumer demand. • Weather forecasting. They refer to the PMAD as the MAPE. although they compute this volume weighted MAPE.Forecasting 3 Mean Absolute Error (MAE) Mean Absolute Percentage Error (MAPE) Percent Mean Absolute Deviation (PMAD) Mean squared error (MSE) Root Mean squared error (RMSE) Forecast skill (SS) Please note that business forecasters and practitioners sometimes use different terminology in the industry.Forecasting can be used in Supply Chain Management to make sure that the right product is at the right place at the right time.[5] See also • • • • Forecast error Calculating Demand Forecast Accuracy Predictability Prediction interval. For more information see Calculating Demand Forecast Accuracy Reference class forecasting was developed to increase forecasting accuracy. similar to confidence interval Applications of forecasting Forecasting has application in many situations: • Supply chain management .

A. ISBN 0-89930-835-X. Bent. Barak. (1998) (in English). google. 1. Forecasting and market analysis techniques: a practical approach. 1. Connecticut. R. pp. no." European Planning Studies. Predicting the future: An introduction to the theory of forecasting. (http://www.pdf). ac. George J. Principles of forecasting: a handbook for researchers and practitioners. com/ index.. January. ISBN 0471455075. 3-21. (http:/ / www.pdf) • Geisser.B (2005) "Another look at measures of forecast accuracy" (http://www.) (2001) (in English). Norwell. Seymour (1 June 1993) (in English). Rob J. 3-21. robjhyndman. p. New York: John Wiley & Sons. Energy and Buildings. ISBN 0-471-53233-9. • Rescher. Vol." European Planning Studies. Snyder. Warren (1976) (in English). pp. _Choosing_the_best_method http:/ / www.ac. com/ index. Koehler. 2008. uk/ centres/ bt/ Documents/ Curbing Optimism Bias and Strategic Misrepresentation. Statistical Forecasting. Process Improvement for Effective Budgeting and Financial Reporting (http:/ / books. Chapman & Hall. Monash University note. 16. vol.robjhyndman.J. sbs. Massachusetts: Kluwer Academic Publishers. forecastingprinciples. php?option=com_content& task=view& id=3& Itemid=3 http:/ / www. 16. • Makridakis. pdf) • Armstrong. Corey S.. J. pp 599 608. London: Quorum Books.ox. B. R. (1990/91) Climate and Building Energy Management. uk/centres/bt/Documents/Curbing Optimism Bias and Strategic Misrepresentation.. vol. John Wiley and Sons. com/ index. [5] Flyvbjerg.com/forecasting/). State University of New York Press. Predictive Inference: An Introduction. Spyros.com/papers/mase. . • Flyvbjerg.Forecasting 4 See also • • • • • • • • • • • • • • Calculating Demand Forecast Accuracy CPFR Forecasting bias Foresight (future studies) Futures studies Futurology Global Prescience Optimism bias Planning Prediction Reference class forecasting Strategic foresight Strategic misrepresentation Technology forecasting References [1] [2] [3] [4] http:/ / www. forecastingprinciples. Eichorn. . com/ books?id=ZxAIxj0ZflgC& pg=PA79& dq="Rolling+ forecast"& client=firefox-a).sbs. forecastingprinciples. John (30 May 1994) (in English). • Gilchrist. Nicholas (1998) (in English). • Taesler. Scott (ed. CRC Press. no. Toby Prince (2003). "Curbing Optimism Bias and Strategic Misrepresentation in Planning: Reference Class Forecasting in Practice. php?option=com_content& task=view& id=17& Itemid=17 Rasmussen. ISBN 0-7923-7930-6.. 2008. • Hyndman. January. 79. Steven. Forecasting: methods and applications (http://www. • Kress. Hyndman. ISBN 0-412-03471-9. Westport. php?option=com_content& task=view& id=3& Itemid=3#D. ISBN 0791435539. Christopher J. Wheelwright. London: John Wiley & Sons. Nils H. ox. 15-16. "Curbing Optimism Bias and Strategic Misrepresentation in Planning: Reference Class Forecasting in Practice. ISBN 0-471-99403-0.

itl.com) .htm) . ISBN 0-415-41675-6 • United States Patent 6098893 Comfort control system incorporating weather forecast data and a method for operating such a system (Inventor Stefan Berglund) 5 External links • Forecasting Principles: "Evidence-based forecasting" (http://www.du.forecastingprinciples.html) • Global Forecasting with IFs (http://www. P.ru/cgi-bin/db. (2006) Upgraded weather forecast control of building heating systems.ifs.A practical guide to Time series analysis and forecasting • Time Series Analysis (http://www.Forecasting • Turchin.nist.com) • Introduction to Time series Analysis (Engineering Statistics Handbook) (http://www. In: History & Mathematics: Historical Dynamics and Development of Complex Societies.com/textbook/sttimser. (http://edurss.edu) • Earthquake Electromagnetic Precursor Research (http://www. (2007) "Scientific Prediction in Historical Sociology: Ibn Khaldun meets Al Saud".quakefinder. pl?cp=&page=Book&id=53185&lang=en&blang=en&list=Found) Moscow: KomKniga. p. 951 ff in Research in Building Physics and Building Engineering Paul Fazio (Editorial Staff). ISBN 978-5-484-01002-8 • Sasic Kaligasidis.statsoft. A et al.gov/div898/ handbook/pmc/section4/pmc4.

Kesten. Truswalu. Yamara. Bongwarrior. org/ licenses/ by-sa/ 3.Article Sources and Contributors 6 Article Sources and Contributors Forecasting  Source: http://en. Markchockal. Michael Hardy. Luk. Mrsaad31. Jaygary. Fuzfadal. Kneale. LandalaEng. Ehrenberg-Bass. Usability Tester 6. Spilla. NeilN. CommodiCast. Katonal. Moonriddengirl. Jonathanmoyer. Wimpie2.org/w/index. DMacks. Melcombe. Rigadoun. Fcaster. Rjhyndman. WikiSlasher. Rohrbeck. Blockright. Tuduser. Arpabr. Dassiebtekreuz. Tony Myers. Giftlite.0 Unported http:/ / creativecommons. Drbreznjev. Phanerozoic. The Anome. Mack2. Beinhauer. The Transhumanist. Dbachmann. Lammidhania. SlackerMom.wikipedia. Pilgaard. Dancter.php?oldid=383229536  Contributors: Abtinb. Spiderwriter. Martinbueno. Bateni. Kuru. Saxifrage. Bernburgerin. Jpo. Chyen. Apdevries. Ckatz. Constancek. Gorgalore. Vddku. Neo-Jay. Vermorel. Hubbardaie. Agraefe. Icseaturtles. Cheapskate08. 83 anonymous edits License Creative Commons Attribution-Share Alike 3. Ricky@36. SueHay. Shadowjams. Kxjtaz. 0/ .

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