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  • Series With Trend

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    Alejandro Carvajal Parra
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    The document discusses forecasting demand when there is a linear trend but no seasonality. It describes two methods: 1) Linear regression to find the slope and intercept that minimize errors and 2) Double exponential smoothing (Holt's method) which dynamically calculates the level/intercept and slope over time, weighting current demand and previous forecasts. Holt's method uses level and trend smoothing parameters between 0-1 and an initialization step to set the initial level and slope values.

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    3. Series with Trend

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    The document discusses forecasting demand when there is a linear trend but no seasonality. It describes two methods: 1) Linear regression to find the slope and intercept that minimize errors and 2) Double exponential smoothing (Holt's method) which dynamically calculates the level/intercept and slope over time, weighting current demand and previous forecasts. Holt's method uses level and trend smoothing parameters between 0-1 and an initialization step to set the initial level and slope values.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    4 views1 page

    Series With Trend

    Uploaded by

    Alejandro Carvajal Parra
    The document discusses forecasting demand when there is a linear trend but no seasonality. It describes two methods: 1) Linear regression to find the slope and intercept that minimize errors and 2) Double exponential smoothing (Holt's method) which dynamically calculates the level/intercept and slope over time, weighting current demand and previous forecasts. Holt's method uses level and trend smoothing parameters between 0-1 and an initialization step to set the initial level and slope values.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    Production Control IIND2201 – section 1

    3. Forecast with trend and without seasonality

    Objective: Perform forcasting when a demand pattern follows a linear trend (increasing or
    decreasing). Dt = at + b + et

    Methods:

    1. Linear regression

    Finding the parameters of a straight line (intersection with the y axis and the slope) in such a way that the quadratic errors
    are minimized

    2. Double exponential smoothing (DES) - Holt

    Estimate the forecast by weighting current demand and previous forecasts. Dynamically calculates the "level" or point on
    the line and the slope in a time series with linear trend

    -Level (intercept) of time series in t: St


    -Time series slope in t: Gt
    -Level smoothing parameter: α 0≤α≤1
    -Trend smoothing parameter: β 0≤β≤1

     Initialization step of Holt to G0 and S0

    a. Linear regression: Find out the slope and the intercept values at t=0.
    b. Stations: Take m groups of N data. One group is one station. Then, estimate the average for each group as Vi
    (i=1,…,m), then:

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