Professional Documents
Culture Documents
Trend Cyclical
Seasonal Random
Seasonal peaks
Actual demand
line
Average demand
over 4 years
Random variation
| | | |
1 2 3 4
Time (years)
Figure 4.1
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Trend Component
Persistent, overall upward or
downward pattern
Changes due to population,
technology, age, culture, etc.
Typically several years
duration
0 5 10 15 20
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Random Component
Erratic, unsystematic, ‘residual’
fluctuations
Due to random variation or unforeseen
events
Short duration
and nonrepeating
M T W T F
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Moving Average Method
Ft = Ft – 1 + (At – 1 - Ft – 1)
n
∑100|Actuali - Forecasti|/Actuali
MAPE = i=1
n
y^ = a + bx
^ where y = computed value of
the variable to be predicted
(dependent variable)
a = y-axis intercept
b = slope of the regression line
x = the independent variable
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Seasonal Variations In Data
The multiplicative
seasonal model
can adjust trend
data for seasonal
variations in
demand
y^ = a + bx
^ where y = computed value of
the variable to be predicted
(dependent variable)
a = y-axis intercept
b = slope of the regression line
x = the independent variable
though to predict the value of the
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as Prentice Hall variable 4 - 23
Associative Forecasting
Example
Sales Area Payroll
($ millions), y ($ billions), x
2.0 1
3.0 3
2.5 4
4.0 –
2.0 2
2.0 1
3.0 –
3.5 7 Sales
2.0 –
1.0 –
| | | | | | |
0 1 2 3 4 5 6 7
Area payroll
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Associative Forecasting
Example
Sales, y Payroll, x x2 xy
2.0 1 1 2.0
3.0 3 9 9.0
2.5 4 16 10.0
2.0 2 4 4.0
2.0 1 1 2.0
3.5 7 49 24.5
∑y = 15.0 ∑x = 18 ∑x2 = 80 ∑xy = 51.5
Nodel’s sales
3.0 –
∑(y - yc)2
Sy,x =
n-2
nxy - xy
r=
[nx
(a) Perfect positive x
2
- (x)2
][ny
(b) Positive ]
2
- (y) 2
x
correlation: correlation:
r = +1 0<r<1
y y