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Forecasting

From Wikipedia, the free encyclopedia

Forecasting is the process of making statements about events whose actual outcomes (typically) have not yet been observed. A commonplace example might be estimation 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]

Contents

1 Categories of forecasting methods 1.1 Time series methods 1.2 Causal / econometric forecasting methods 1.3 Judgmental methods 1.4 Artificial intelligence methods 1.5 Other methods 2 Forecasting accuracy 3 Applications of forecasting 4 See also 5 References 6 External links

**Categories of forecasting methods
**

Time series methods

Time series methods use historical data as the basis of estimating future outcomes.

Moving average weighted moving average Exponential smoothing Autoregressive moving average (ARMA)

http://en.wikipedia.org/wiki/Forecasting

3/16/2011

wikipedia. http://en. 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.Forecasting . the free encyclopedia Page 2 of 5 Autoregressive integrated moving average (ARIMA) e. Box-Jenkins Extrapolation Linear prediction Trend estimation Growth curve Causal / econometric forecasting 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. These methods include both parametric (linear or non-linear) and non-parametric techniques.g. Autoregressive moving average with exogenous inputs (ARMAX) Judgmental methods Judgmental forecasting methods incorporate intuitive judgements.Wikipedia. including information about weather conditions might improve the ability of a model to predict umbrella sales.org/wiki/Forecasting 3/16/2011 . opinions and subjective probability estimates. For example. Such methods include: Regression analysis includes a large group of methods that can be used to predict future values of a variable using information about other variables.

Wikipedia. the free encyclopedia Page 3 of 5 where E is the forecast error at period t. For more information see Calculating Demand Forecast Accuracy Reference class forecasting was developed to increase forecasting accuracy.[4] See also Forecast error Calculating Demand Forecast Accuracy Consensus forecasts Predictability Prediction interval. Measures of aggregate error: 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. Accurate forecasting will also help them meet consumer demand. although they compute this volume weighted MAPE.wikipedia. similar to confidence interval Applications of forecasting Forecasting has application in many situations: Supply chain management . and F is the forecast for period t.Forecasting . Weather forecasting. Accurate forecasting will help retailers reduce excess inventory and therefore increase profit margin. Y is the actual value at period t. They refer to the PMAD as the MAPE.Forecasting can be used in Supply Chain Management to make sure that the right product is at the right place at the right time.org/wiki/Forecasting 3/16/2011 . Flood forecasting and Meteorology http://en.

3-21. CRC Press. the free encyclopedia Page 4 of 5 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 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. 3-21. Chapman & Hall. vol. 16. pp." European Planning Studies. Seymour (1 June 1993) (in English).forecastingprinciples. Gilchrist.forecastingprinciples. Massachusetts: Kluwer Academic Publishers. no. 16. Predictive Inference: An Introduction.Wikipedia.org/wiki/Forecasting 3/16/2011 . ^ http://www.com/index. J.php?option=com_content&task=view&id=17&Itemid=17 4.php? option=com_content&task=view&id=3&Itemid=3#D. 2008. Statistical Forecasting. ^ http://www.) (2001) (in English). January. ^ Flyvbjerg.com/index. Armstrong. 2008._Choosing_the_best_method 3.com/index. ISBN 07923-7930-6. ISBN 0-471-99403-0. January. B. Scott (ed. 1. London: John Wiley & Sons. Bent. 1.Forecasting . "Curbing Optimism Bias and Strategic Misrepresentation in Planning: Reference Class Forecasting in Practice. pp. "Curbing Optimism Bias and Strategic Misrepresentation in Planning: Reference Class Forecasting in Practice. ^ http://www. Geisser. no." European Planning Studies. http://en. ISBN 0-412-03471-9.wikipedia. Norwell.forecastingprinciples. vol. Warren (1976) (in English). Flyvbjerg.. Principles of forecasting: a handbook for researchers researchers and practitioners.php?option=com_content&task=view&id=3&Itemid=3 2.

1516. Rescher. Nicholas (1998) (in English). (2006) Upgraded weather forecast control of building heating systems. pp 599 – 608. ISBN 0-471-53233-9. R. Makridakis. A et al. (1998) (in English). Monash University note.org/wiki/Forecasting" Categories: Data analysis | Statistical forecasting | Time series analysis | Supply chain management terms This page was last modified on 13 March 2011 at 21:51. Forecasting and market analysis techniques: a practical approach.org/wiki/Forecasting 3/16/2011 . A. (2007) "Scientific Prediction in Historical Sociology: Ibn Khaldun meets Al Saud". Westport.Forecasting . 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) External links Forecasting Principles: "Evidence-based forecasting" Introduction to Time series Analysis (Engineering Statistics Handbook) .Wikipedia.wikipedia.wikipedia. See Terms of Use for details.J. p. Hyndman. Kress. State University of New York Press. In:History & Mathematics: Historical Dynamics and Development of Complex Societies. R.. ISBN 978-5-484-01002-8 Sasic Kaligasidis. additional terms may apply.B (2005) "Another look at measures of forecast accuracy". http://en. Taesler. Forecasting: methods and applications. Turchin. ISBN 0791435539. Vol. the free encyclopedia Page 5 of 5 Hyndman. Energy and Buildings. George J.A practical guide to Time series analysis and forecasting Time Series Analysis Global Forecasting with IFs Earthquake Electromagnetic Precursor Research Retrieved from "http://en. Spyros. P. Koehler.. a non-profit organization. 951 ff in Research in Building Physics and Building Engineering Paul Fazio (Editorial Staff). Wikipedia® is a registered trademark of the Wikimedia Foundation. Text is available under the Creative Commons Attribution-ShareAlike License. John (30 May 1994) (in English). Connecticut. Predicting the future: An introduction to the theory of forecasting.. Wheelwright. Steven. New York: John Wiley & Sons. Inc. Rob J. Snyder. ISBN 0-89930835-X. (1990/91) Climate and Building Energy Management. London: Quorum Books. Moscow: KomKniga.

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