Download - Deseasonalizing Forecasts
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DeseasonalizingForecasts
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Agenda:
• Seasonality defined & seasonal adjustmentmethods
• Brainstorming Exercise•
Nuts and Bolts• How It Wors• Seasonal adjustment exam!le• Exercise• Summary• A!!endix A: Solution to Exercise
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Seasonality
• A re!eated !attern of s!ies or dro!sin the "aria#le of interest associatedwith a period of time
• Exam!les$ – %onsumer #uying ha#its
– rice of gasoline
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Seasonality
• %auses of seasonal mo"ement #yclass:
'( Weather )tem!erature*!reci!itation+
,( Calendar Events )religious orsecular festi"als+
-( Timing decisions )"acations*accounting !eriods+
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Seasonal Adjustment.ethods
• Seasonal index
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How It Wors:4eseasonali5ing 6orecasts
6our$ste! !rocedure for seasonaladjustments:
'( %alculate forecast for each demand"alues in the time series
,( 6or each demand "alue* calculate4emand76orecast
-( A"erage the 4emand76orecast for monthsor 1uarters to get the seasonal index
8( .ulti!ly the unadjusted forecast #y theseasonal index to find adjusted forecast"alue
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Season AdjustmentExam!le
• 6oster %om!any maes widgets(3he 1uarterly demand for itswidget is gi"en in Exhi#it '
• 9sing linear regressionforecasting* de"elo! a seasonalindex for each 1uarter andreforecast each 1uarter
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Seasonal Adjustments Exam!le =Ste! '
• 6orecasted demand
;>?(@??(@?
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Seasonal Adjustments Exam!le= Ste! ,
• 6or eachdemand "alue*calculate
4emand76orecast
• ear ' Cuarter
':
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Seasonal Adjustments Exam!le $Ste! -
• A"erage the 4emand76orecastfor the 1uarters to get the
seasonal index• Cuarterly Seasonal Index for
Cuarter ':
)(D,
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Seasonal Adjustments Exam!le $Ste! 8
• .ulti!ly the unadjusted forecast #ythe seasonal index to find theadjusted forecast "alues
• ear ' Cuarter ':
>>(> (- ; ,(D )adjusted forecast+
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Seasonal Adjustments Exam!le $Ste! 8
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Seasonal AdjustmentsExam!le
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Exercise• Smith %om!any maes widgets(
3he 1uarterly demand for itswidget is gi"en in Exhi#it A
• ou ha"e #een ased to de"elo!a seasonal index for each1uarter and reforecast each1uarter
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Exercise 3a#le
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Summary
• 4eseasonali5ing forecasts is effecti"efor – Short$term forecasting
– %om!ara#ility
– 4etecting trend changes early
• 3he Seasonal Index is the most
sim!le method for maing seasonaladjustments
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A!!endix A: Solution toExercise
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A!!endix A: Solution toExercise