tm 745 forecasting for business & technology paula jensen south dakota school of mines and...
TRANSCRIPT
![Page 1: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/1.jpg)
TM 745 Forecasting for Business & Technology
Paula Jensen
South Dakota School of Mines and Technology, Rapid City
1st Session 1/11/2012: Chapter 1 Introduction to Business Forecasting
![Page 2: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/2.jpg)
Agenda Class Overview/Syllabus highlights Assignment Chapter 1 by Guest Lecturer Dr.
Stuart Kellogg
Business Forecasting 6th Edition J. Holton Wilson & Barry KeatingMcGraw-Hill
![Page 3: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/3.jpg)
Instructor Information
Instructor Paula Jensen
Office Location IE/CM 320
Office Hours CM 320 M,W 2:00-3:00 pmIER T,TH, F 11:00-11:50 AME-mail for an appointment outside of office hours.
Office Phone 605-394-1770
E-mail [email protected] pjensen.sdsmt.edu
![Page 4: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/4.jpg)
Course Materials Powerpoints & Class Information
Website: pjensen.sdsmt.edu via the ENGM 745
Engineering Notebook – 9-3/4" x 7-1/2", 5x5 quad-ruled, 80-100 pp. (approx.)
Engineering/Scientific calculator Book: Business Forecasting 6th Edition J.
Holton Wilson & Barry KeatingMcGraw-Hill
One case from Harvard Business Review
![Page 5: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/5.jpg)
Prerequisites
1) Probability and Statistics2) Understanding of
Excel/Spreadsheet software.3) It is expected that students will be
able to access and download internet files.
![Page 6: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/6.jpg)
Course Objective to educate prospective managers about
the philosophies and tools of sound forecasting principles
to provide technical managers with a theoretical basis for statistical forecasting
to provide technical managers with the fundamentals methods available for technological and qualitative forecasts
![Page 7: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/7.jpg)
Evaluation Procedures
60% - 2 Exams20% - 1 Project20% - Interaction
A 90-100B 80-89C 70-79D 60-69F < 60
![Page 8: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/8.jpg)
Exams Students signed up for the on-campus
section are required to take the test at the given time.
Make-up Exams available for University-Approved reasons.
All exams are open engineering notebook, and use of a scientific calculator is encouraged.
Distance Students need proctors- See Syllabus for further details
![Page 9: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/9.jpg)
Project & Interaction Grades
Project Criteria to be discussed through Class
Interaction Assignments will include discussions, quizzes, and other assignments
![Page 10: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/10.jpg)
Email Policy:
If you are writing about issues relating to the class, make sure the subject line reads ENGM 745: (subject info) so I can sort my e-mails and answer accordingly.
Please be professional in your e-mails. (no texting lingo!)
![Page 11: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/11.jpg)
Academic Honesty
Cheating: use or attempted use of unauthorized materials, information or study aids
Tampering: altering or interfering with evaluation instruments and documents
Fabrication: falsification or invention of any information
Assisting: helping another commit an act of academic dishonesty
Plagiarism: representing the words or ideas of another as one's own
![Page 12: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/12.jpg)
ADA
Students with special needs or requiring special accommodations should contact the instructor and/or the campus ADA coordinator, Jolie McCoy, at 394-1924 at the earliest opportunity.
![Page 13: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/13.jpg)
First Assignment
Send me a contact info e-mail. Include all important contact information phones, e-mail, and mail addresses. Preferred mode.
Send via e-mail a Current Resume Problems 1,4, & 8 in chapter 1 – I don’t
need these sent. I will post solutions.
![Page 14: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/14.jpg)
Introduction to Business Forecasting
![Page 15: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/15.jpg)
![Page 16: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/16.jpg)
Quantitative Forecasting Has Become Widely Accepted
Intuition alone no longer acceptable.
Used in Future Sales Inventory needs Personnel requirements
Judgment still is needed
![Page 17: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/17.jpg)
Forecasting in Business Today
Two Professional Societies Accountants: costs, revenues (tax
plans) Personnel: recruitment, changes in
workforce Finance: cash flows Production: raw-material needs &
finished goods inventory Marketing: sales
![Page 18: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/18.jpg)
Forecasting in Business Today
mid-80’s 94% large American firmsused sales forecasts
Krispy Kreme New stores model with errors of < 1%
Bell Atlantic Data warehouse (shared) of monthly
history Subjective, regression, time series, Forecasts monitored & compared
![Page 19: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/19.jpg)
Forecasting in Business Today
Columbia Gas (natural gas company) Design Day Forecast (supply)
Gas supply, transportation capacity, storage capacity, & related
Daily Operational (demand) Regression on temperatures,
wind speed, day of the week, etc.
![Page 20: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/20.jpg)
Forecasting in Business Today
Segix Italia (Pharmaceutical company) Marketing forecasts for seven main drugs Targets for sales representatives
Pharmaceuticals in Singapore Glaxo-Wellcome, Bayer, Pfizer,
Bristol-Myers Squibb HR, Strategic planning, sales Quantitative & judgments
![Page 21: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/21.jpg)
Forecasting in Business Today
Fiat Auto (2 million vehicles annually) All areas use centrally prepared forecasts Use macro-economic data as inputs From totals sales to SKU’s
Douglas Aircraft Top down (miles flown in 32 areas) Bottom up (160 Airlines studied)
![Page 22: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/22.jpg)
Forecasting in Business Today
Trans World Airlines Uses a top down (from total market)
approach for sales Regression & Trend models
Brake Parts Inc. 250,000 SKU’s Forecast system saves $6M/mo. 19 time series methods
![Page 23: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/23.jpg)
Forecasting in the Public and Not-for-Profit Sectors
Police calls for service by cruiser district
State government Texas: Personal income, electricity sales,
employment, tax revenues California: national economic
models, state submodel, tax revenues, cash flow models
Hospitals: staff, procedures,
![Page 24: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/24.jpg)
Collaborative Forecasting Manufacturer’s forecast > Retailers
Retailer’s extra info > Manufacturers1. Lower Inventory2. Fewer unplanned shipments or runs3. Reduced Stockouts4. Increase customer satisfaction5. Better sales promotions6. Better new product intros7. Respond to Market changes
![Page 25: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/25.jpg)
Computer Use and Quantitative Forecasting Computer use common by mid 80’s Packages run from $100 to thousands PC systems generally have replaced
mainframes for state government work PC’s dominant at conferences Chase of Johnson & Johnson
Forecasting 80% math, 20% judgment
![Page 26: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/26.jpg)
Subjective Forecasting Methods
Only way to forecast 40 years out Sale-Force Composite
Inform sales staff of data Bonus for beating the forecast ??
Surveys of Customers/Population Jury of Executive Opinion The Delphi Method (Experts)
![Page 27: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/27.jpg)
New-Product Forecasting
A special consideration Surveys Test marketing ( Indy, K-zoo, not
KC) Analog Forecasts: movie toys
![Page 28: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/28.jpg)
New Product Short Life Cycle
![Page 29: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/29.jpg)
New Product Short Life Cycle
![Page 30: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/30.jpg)
New Product Short Life Cycle
![Page 31: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/31.jpg)
Product Life Cycle
![Page 32: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/32.jpg)
Bass Model
![Page 33: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/33.jpg)
Two Simple Naive Models (4th)
![Page 34: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/34.jpg)
Two Simple Naive Models (4th)
![Page 35: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/35.jpg)
Evaluating Forecasts
![Page 36: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/36.jpg)
Evaluating Forecasts
![Page 37: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/37.jpg)
Evaluating Forecasts
![Page 38: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/38.jpg)
Measurement ErrorsStandard Deviation
SX nX
nt
( )
.
.
2
1
0 408
11
0193
Soda Demand (1,000,000's)
Month t At At2
(At-Abar)2
Jul 1 2.47 6.1009 0.002934Aug 2 2.31 5.3361 0.011201Sep 3 2.24 5.0176 0.030917Oct 4 2.27 5.1529 0.021267Nov 5 2.15 4.6225 0.070667Dec 6 2.34 5.4756 0.005751Jan 7 2.23 4.9729 0.034534Feb 8 2.48 6.1504 0.004117Mar 9 2.46 6.0516 0.001951Apr 10 2.58 6.6564 0.026951May 11 2.74 7.5076 0.105084Jun 12 2.72 7.3984 0.092517
Sum = 78 28.99 70.44 0.408
Avg = 6.5 2.416
St. Dev = 0.193
![Page 39: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/39.jpg)
Measurement ErrorsStandard Deviation
SX nX
nt
2 2
2
1
70 44 12 2 416
11
0193
. ( . )
.
Soda Demand (1,000,000's)
Month t At At2
(At-Abar)2
Jul 1 2.47 6.1009 0.002934Aug 2 2.31 5.3361 0.011201Sep 3 2.24 5.0176 0.030917Oct 4 2.27 5.1529 0.021267Nov 5 2.15 4.6225 0.070667Dec 6 2.34 5.4756 0.005751Jan 7 2.23 4.9729 0.034534Feb 8 2.48 6.1504 0.004117Mar 9 2.46 6.0516 0.001951Apr 10 2.58 6.6564 0.026951May 11 2.74 7.5076 0.105084Jun 12 2.72 7.3984 0.092517
Sum = 78 28.99 70.44 0.41
Avg = 6.5 2.416
St. Dev = 0.193
![Page 40: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/40.jpg)
Measurement ErrorsMAE
| |
| 2.47 2.416 | | 2.31 2.416 | ...
12
0.159
tX XMAE
n
Soda Demand (1,000,000's)
Month t At |At - Abar|
Jul 1 2.47 0.0542
Aug 2 2.31 0.1058
Sep 3 2.24 0.1758
Oct 4 2.27 0.1458
Nov 5 2.15 0.2658
Dec 6 2.34 0.0758
Jan 7 2.23 0.1858
Feb 8 2.48 0.0642
Mar 9 2.46 0.0442
Apr 10 2.58 0.1642
May 11 2.74 0.3242
Jun 12 2.72 0.3042
Sum = 78 28.99 1.91
Avg = 6.5 2.416 0.159
St. Dev = 0.193
![Page 41: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/41.jpg)
Measurement ErrorsMAE
| |
| 2.47 2.416 | | 2.31 2.416 | ...
12
0.159
tX XMAE
n
Soda Demand (1,000,000's)
Month t At |At - Abar|
Jul 1 2.47 0.0542
Aug 2 2.31 0.1058
Sep 3 2.24 0.1758
Oct 4 2.27 0.1458
Nov 5 2.15 0.2658
Dec 6 2.34 0.0758
Jan 7 2.23 0.1858
Feb 8 2.48 0.0642
Mar 9 2.46 0.0442
Apr 10 2.58 0.1642
May 11 2.74 0.3242
Jun 12 2.72 0.3042
Sum = 78 28.99 1.91
Avg = 6.5 2.416 0.159
St. Dev = 0.193
In general,
0.8(.193) = 0.154
0.8MAE S
![Page 42: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/42.jpg)
Measurement ErrorsSoda Demand (1,000,000's)
Month t At (At - Ahat)
Jul 1 2.47 0.0542
Aug 2 2.31 -0.1058
Sep 3 2.24 -0.1758
Oct 4 2.27 -0.1458
Nov 5 2.15 -0.2658
Dec 6 2.34 -0.0758
Jan 7 2.23 -0.1858
Feb 8 2.48 0.0642
Mar 9 2.46 0.0442
Apr 10 2.58 0.1642
May 11 2.74 0.3242
Jun 12 2.72 0.3042
Sum = 78 28.99 0.00
Avg = 6.5 2.416 0.000
St. Dev = 0.193
Mean Error
MEe
nt
( . . ) ( . . ) ...
.
2 47 2 416 2 31 2 416
12
0 0
![Page 43: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/43.jpg)
Measurement ErrorsSoda Demand (1,000,000's)
Month t At Ft et |et| et2
Jul 1 2.47 2.416 0.054 0.054 0.003
Aug 2 2.31 2.416 -0.106 0.106 0.011
Sep 3 2.24 2.416 -0.176 0.176 0.031
Oct 4 2.27 2.416 -0.146 0.146 0.021
Nov 5 2.15 2.416 -0.266 0.266 0.071
Dec 6 2.34 2.416 -0.076 0.076 0.006
Jan 7 2.23 2.416 -0.186 0.186 0.035
Feb 8 2.48 2.416 0.064 0.064 0.004
Mar 9 2.46 2.416 0.044 0.044 0.002
Apr 10 2.58 2.416 0.164 0.164 0.027
May 11 2.74 2.416 0.324 0.324 0.105
Jun 12 2.72 2.416 0.304 0.304 0.093
Sum = 78 28.99 28.99 0.00 1.91 0.41
Avg = 6.5 2.416 2.416 0.000 0.159 0.034
St. Dev = 0.193
![Page 44: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/44.jpg)
Using Multiple Forecasts
Use judgment Reference:
Combining Subjective andObjective Forecasts.
![Page 45: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/45.jpg)
Sources of Data
Internal records Timeliness & formatting problems
Government & syndicated services (good)
Web Used by gov’t & syndicated Sites changes
![Page 46: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/46.jpg)
Domestic Car Sales (4th ed ex.)
![Page 47: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/47.jpg)
Domestic Car Sales (4th ed ex)
![Page 48: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/48.jpg)
Domestic Car Sales (4th ed ex)
![Page 49: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/49.jpg)
Forecasting FundamentalsSoda Demand (1,000,000's)
Month t At
Jul 1 2.47
Aug 2 2.31
Sep 3 2.24
Oct 4 2.27
Nov 5 2.15
Dec 6 2.34
Jan 7 2.23
Feb 8 2.48
Mar 9 2.46
Apr 10 2.58
May 11 2.74
Jun 12 2.72
Consider the followingsales data over a 12 month period.
![Page 50: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/50.jpg)
Summary StatisticsSoda Demand (1,000,000's)
Month t At
Jul 1 2.47
Aug 2 2.31
Sep 3 2.24
Oct 4 2.27
Nov 5 2.15
Dec 6 2.34
Jan 7 2.23
Feb 8 2.48
Mar 9 2.46
Apr 10 2.58
May 11 2.74
Jun 12 2.72
XX
nt
2 47 2 31 2 72
12
2 42
. . ... .
.
Mean
![Page 51: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/51.jpg)
Summary StatisticsMedian
Sorted Demand
t At
5 2.15
7 2.23
3 2.24
4 2.27
2 2.31
6 2.34
9 2.46
1 2.47
8 2.48
10 2.58
12 2.72
11 2.74
Xm
2 34 2 46
2
2 40
. .
.
![Page 52: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/52.jpg)
Summary StatisticsSoda Demand (1,000,000's)
Month t At
Jul 1 2.47
Aug 2 2.31
Sep 3 2.24
Oct 4 2.27
Nov 5 2.15
Dec 6 2.34
Jan 7 2.23
Feb 8 2.48
Mar 9 2.46
Apr 10 2.58
May 11 2.74
Jun 12 2.72
Mode
No number repeats no mode
![Page 53: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/53.jpg)
Summary StatisticsModal Range
Sorted Demand
t At
5 2.15
7 2.23
3 2.24
4 2.27
2 2.31
6 2.34
9 2.46
1 2.47
8 2.48
10 2.58
12 2.72
11 2.74
2.31 - 2.47
![Page 54: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/54.jpg)
Summary Statistics
Modal Range
2.5 to 3.0
Soda Sales
0
10
20
30
40
0.5 1.0 1.5 2.0 2.5 3.0 More
Volume
Fre
qu
en
cy
![Page 55: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/55.jpg)
Overview of the Text Ch 1 Intro Ch 2 Forecast Process (more Intro) Ch 3 MA & Exponential Smoothing Ch 4 Regression Ch 5 Multiple Regression Ch 6 Time-Series Decomposition Ch 7 ARIMA Box-Jenkins Ch 8 Combining Forecasts Ch 9 Forecast Implementation
![Page 56: TM 745 Forecasting for Business & Technology Paula Jensen South Dakota School of Mines and Technology, Rapid City 1st Session 1/11/2012: Chapter 1 Introduction](https://reader038.vdocuments.us/reader038/viewer/2022110100/56649e3b5503460f94b2d2a9/html5/thumbnails/56.jpg)
Upcoming Events No Class next week Figure out what your log-in/password is
to D2l if you have not yet. It is the same as WebAdvisor - (Here is the website for D2L: https://d2l.sdbor.edu/)
Watch U-tube videos posted on Website Discussions on D2L- Ready 1/20/2012 Read Chapter 2 for Class on 1/25/2012