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1. ForecastingTechniques
AvercastLLC @avercast

2. 1. Gatherdataandinformationregardingthefutureevent.
2. Analyzethedataandinformation.
3. Combinetheanalysisandjudgmenttomakeaprediction.
4. Deployeffortstoaddressthefutureopportunityandneed.
Howaredifferent forecastsconstructed?

3. StableDemandPattern
Ifdemandpatternsarestableandthereissufficienthistoricaldata,
thenquantitativemethodsarebetterrelieduponforaccurate
forecasting.

4. WhenDataisScarce
Withlittleornohistoricaldata,suchaswithanewproductor
technology,qualitativeinputs(opinionsandjudgements,from
experienceonsimilarproducts)arerelieduponforaccuracy.

5. TimeSeries
Quantitativeforecastingmethodsrequireatimeseries,tofunction.
Atimeseriesisasetofdataarrangedinchronologicalorder.
Observingtimeseriesdatausuallydisplaysrandomness,trends,
seasonalityandcycles.

6. CommonQuantitativeForecastingMethods
MovingAverage
WeightedMovingAverage
TrendProjection
Naïve
MultiplicativeSeasonal
AssociativeMethods(regressionandcorrelation)

7. MovingAverage
MovingAverageforecastingtakestheaverageoverapasttime
horizontouchingrealtime.
Forexample,thetimehorizoncouldbeonemonth,thereforethe
forecastwouldbetheaveragesalesoverthepastmonth.Or,ifthe
timehorizonweretwoweeks,theforecastwouldbetheaverage
salesoverthepasttwoweeks,etc.

8. WeightedMovingAverage
Weightedmovingaverageissimilartomovingaverage,exceptthat
wewouldapplyweightsofimportancetotheproducts,trends,or
timehorizonsofmostimportance.

9. TrendProjection
Themethodofforecastingbasedupontheleastsquares
mathematicaltechniquefittingthelineofbestfit.

10. NaïveMethod
Naïvemethodsimplyforecaststheexactamountthatwassoldlast
period.
Forexample,iflastDecemberyousold200chairs,youwillforecast
200chairsthisDecember.Youwillnottakeintoaccountanyother
factors.

11. MultiplicativeSeasonal
MultiplicativeSeasonalforecastingisacombinationof
randomnessandtrend.
StepsthatallowMultiplicativeSeasonalforecastingare:
1. Computeanaveragesalesbytimehorizon.
2. Computetheoverallsalesaverageoftimehorizoncombined.
3. ComputetheSeasonalIndexpereachmonthbydividingthe
eachtimehorizonssalesbytheoverallaverage.

12. MostCommonQualitativeMethods
•SalesForceComposite:Estimatesfromfieldsalespeopleare“rolledup”oraggregated.
•FieldSalesandProductLineManagement:Aggregatedforecastsfromfieldsalespeopleare
reconciledwithprojectionsfromproductlinemanagers.
•ExecutiveOpinion:Marketing,production,andfinancemanagersjointlypreparetheforecast.
•Delphi:Acostlybuteffectivemethodwhereexpertsindividuallydevelopforecasts,sharetheir
forecasts,andthenrevisetheirforecastsuntilconsensusisreached.
•MarketSurveys:Questionnairesorinterviewsgiventopotentialcustomerstolearnabout
consumerbehavior.