Student Name: NGUYỄN NGỌC HÂN

Student ID: IELSIU19018

TIME SERIES & FORECASTING

HOMEWORK 1

Question 1: (60 points)

Figure 1: General process of forecasting applied to various industries, such as supply chain, production, marketing, etc.

1
Student Name: NGUYỄN NGỌC HÂN
Student ID: IELSIU19018

Detailed explanation
Step Explanation Examples
With a view to identifying why should forecasting be conducted and
to desbribing the problem appropriately, below is a list of questions a
forecaster may ask himself before calculating.
Short-term forecasts are needed for the
scheduling of personnel, production, and
 Why is a forecast needed?
transportation. As part of the scheduling
 Who will use the forecast, and what are their specific
process, forecasts of demand are often
requirements?
also required.
 What level of detail or aggregation is required, and what is the
proper time horizon? Medium-term forecasts are needed to
 Long term: requires many years worth of data determine future resource requirements,
1. Identifying the  Medium: in order to purchase raw materials, hire
purpose of the forecast o Analyze months worth of data (12 months) personnel, or buy machinery and
o Mix of judgmental and quantitative equipment.
o Seasonal adjustments
 Short: Use simple quantitative methods because of number of Long-term forecasts are used in strategic
forecasts planning. Such decisions must take
 What data are available, and will the data be sufficient to generate account of market opportunities,
the needed forecast? environmental factors, and internal
 Will the forecast be made in time to help the decision-making resources.
process?
 Etc.
2. Collecting the The building block used by forecasters is historical data or the past  Sales records of a company

2
Student Name: NGUYỄN NGỌC HÂN
Student ID: IELSIU19018

performance of the business to predict future results.  The data

required for forecasting may already exist. These days, a lot of data  Historical demand for a product
historical data are recorded, and the forecaster’s task is often to identify where and  Unemployment rate for a geographic
how the required data are stored, and to cleanse data before data region
could be used in further steps.

One of the most important steps in selecting an appropriate

3. Identifying the data forecasting method for time series data is to consider the different
pattern types of data patterns. There are typically four general types of
patterns: horizontal, trend, seasonal, and cyclical.

Data is reasonably stationary: Heuristics – Average methods

 Naive
 Moving average
 Simple exponential smoothing  Moving averages help technical
4. Selecting a forecasting traders to generate trading signals.
Data shows a consistent trend: Regression
model appropriate for  Linear and non-linear models could
 Linear
the data pattern help production manager with
 Non-linear regression
product-mix manufacturing.
Data shows a trend and a seasonal pattern: Classical decomposition
 Find seasonal index
 Use regression analyses to find the trend component
5. Developing forecast Forecasting could be done using one or more techniques using proper Microsoft Excel is a great tool to start
for the period of applications. Different businesses utilize different applications to with for learners and is used widely in

3
Student Name: NGUYỄN NGỌC HÂN
Student ID: IELSIU19018

historical data forecast. Vietnam’s small-medium enterprises.

Ways to evaluate:
MAPE expresses the forecast error in
 Mean average deviation (MAD) relation to sales volume, telling you by
6. Checking the forecast  Mean absolute percentage error (MAPE) how many percentage points your
accuracy with one or  Standard error forecasts are off, on average. This is
more measures  BIAS probably the single most commonly used
 R-Squared forecasting metric in demand planning.
7. Is the accuracy of the forecast acceptable?
8b. “No”  Select new
forecasting model or Repeat step 7 until generating accurate results  Step 8a
adjust parameters
8a. “Yes”  Forecast over the planning horizon
Qualitative forecasting methods are subjective, based on the judment
of the experts and consumers. Qualitative methods are mainly
appropriate when past data is not available, yet they could be of great The market research method involves
use at this step utilizing the so-called “business sense” and consulting with current or potential
9. Adjusting forecast experience of the decision maker. customers. Companies conduct market
based on additional research to obtain information to use to
qualitative information Some qualitative forecasting methods: make accurate predictions about the size,
and insight  Executive opinions scope, demographics and buying habits
 Delphi methods of a particular product and service market
 Sales force polling or niche.
 Consumer surveys
10. Monitoring results and measuring forecast accuracy

Question 2: (40 points)

4
Student Name: NGUYỄN NGỌC HÂN
Student ID: IELSIU19018

1. The price of an airline ticket during different seasons

2. Name and addresses of users
3. Number of steps walked every day for the past year
4. Geo-spatial data of all the hiking trails in Yosemite
5. Weekly energy consumption
6. Number of hotel rooms booked in the last 6 months.
7. The total sales in the past 3 years of an insurance company.
8. The number of calls for the last 2 weeks.

Time series: Datasets no. 1, 3, 5, 6, 8

 By definiton, those datasets are classified as time series because they are continously collected from a process with equally spaced
periods of time and are dynamic (change over time).
Not time series: Datasets no. 2, 4, 7

 Dataset 2: Name of users cannot change over time

 Dataset 4: Geo-spatial relates to information that identifies where particular features are on the earth's surface, such as oceans and
mountains. This kind of data is not dynamic either.
 Dataset 7: The totsl sales is just a number; it does not reflect a process or change over time.

------------------- THE END -------------------