3...forecasting methods
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Presented byNazrin Jamal
3rd Sem IF CUSAT
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Method or technique for estimating many future aspects of a business or other
operation. It is used in the practice of customer demand
planning in every day business forecasting for manufacturing companies.
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There are three types of forecasting 1.Qualitative or Judgmental methods 2.Extrapolative or Time series methods 3.Causal or Explanatory methods
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Rely on experts or managers opinion in making prediction for the future.
Useful for medium to long range forecasting tasks.
Provide a basis for some important decisions.
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Three important Qualitative methods are :-Delphi Technique - Develop forecast through
group consensus.Market Surveys – Involves the use of
questionnaires, consumer panels & tests of new products & services.
Scenario Writing - process of analyzing possible future events by considering alternative possible outcomes.
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Use past history of demand. Comprised of four separate components:
trend component, cyclical component, seasonal component, and irregular component.
The objective of this method is to identify the pattern in historic data & extrapolate this for future.
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TYPES OF EXTRAPOLATIVE METHODSMoving Average Method - average of
demands occurring in several of the most recent periods.
Weighted Moving Average - allows for varying weighting of old demands.
Exponential Smoothing – exponentially decreases the weighting of old demands.
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A statistical forecasting model based on historical demand data as well as on variables believed to influence demand.
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There are two types of Causal forecasting methods
Regression analysis - a functional relationship is established between variables from the historical data and then used to forecast dependent variable values.
Econometric method – an extension of regression analysis and include a system of simultaneous regression equations.
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THANK YOU