A statement about the future value of a variable of interest.
What are the 6 steps in forecasting?
1. determine the purpose of the forecast.
2. Establish a time horizon.
3. Select a forecasting technique.
4. Obtain, clean, and analyze appropriate data.
5. Make the forecast.
6. Monitor the forecast.
Define qualitative forecasting.
Qualitative techniques permit the inclusion of soft information such as human factors, personal opinions, hunches.
Define quantitative forecasting.
Involves either the projection of historical data or the development of associative methods that attempt to use casual variables to make a forecast.
What are the 3 types of forecasts?
Define judgmental forecasts.
Forecasts that use submective inputs such as opinions from consumer surveys, sales staff, managers, executives, and experts.
Define time series forecasts.
A time-ordered sequence of observations taken at regular time intervals.
Define predictor variables.
Variables that can be used to predict values of the variable of interest
A technique for fitting a line to a set of data points.
Define simple linear regression.
The simplest form of regression that involves a linear relationship between two variables.
A long-term upward or downward movement in data.
Short-term, fairly regular variations related to the calendar or time of day. A pattern of demand that repeats itself in the short run.
Wavelike variations lasting more than one year.
Define random variation.
Residual variation that remains after all other behaviors have been accounted for.
Define irregular variation.
Due to unusual circumstances that do not reflect typical behavior
Define naive forecast.
Uses a single previous value of a time series as the basis for a forecast.