PMM Doc 7
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satexFORECASTING
TOOLS &
TECHNIQUES
WHAT IS FORECASTING?
Forecasting is the process of estimating a
variable, such as the sale of the firm at some
future date.
VARIOUS FORECASTING
TECHNIQUES:
Qualitative forecasting techniques are
subjective, based on the opinion and
judgment of consumers, experts;
Quantitative forecasting models are used to
forecast future data as a function of past
data; they are appropriate when past data
are available.
Econometric forecasting try to identify the
underlying factors that might influence the
variable that is being forecast
Judgmental forecasting methods
incorporate intuitive judgments, opinions
and subjective probability estimates such as
opinion poll, consumer survey etc.
WHAT IS DEMAND FORECASTING
?
Demand forecasting is the activity
of estimating the quantity of a product or
service that consumers will purchase.
WHAT IS FORECASTING BIAS ?
A forecast bias occurs when there are
consistent differences between actual
outcomes and previously generated forecasts
of those quantities;
HOW TO DETERMINE
FORECASTING FOR SINGLE DATA ?
a)Calculating the table values:
Step 1:
Assume the years as ‘X’ .
Step 2:
Assume the given data’s as ‘y’.
Step 3:
Determine the deviation from the middle year
‘X’ & assume the value as ‘x’.
Step 4 :
Determine the square values of ‘x’ .
Step 5 :
Multiply the values of ‘x’ & ‘y’.
B)CALCULATION OF
RESULTANTS
Step 1:
Calculate the total number of years as ‘N’.
Step 2:
Calculate the summation of ‘y’
Step 3:
Calculate the summation of ‘x’.
Step 4:
Calculate the summation of ‘x2’
Step 5 :
Calculate the summation of ‘xy’.
C)FINAL STEPS OR FORECASTING FORMULAS :
Step 1:
Forecasting formula : Yc = a + bx
Step 2:
Calculation of ‘a’ where’s a= ∑y
N
Step 3:
Calculation of ‘b’ where’s b= ∑xy
∑x2
PROBLEM
Below are the given production(in metric
tones) of a production company:
Y1998 1999 2000 2001 2002 2003 2004
P 80 90 92 83 94 99 92
Estimate/Forecast the likely production of
2007.
