Chapter 3 - Forecasting. In this chapter, students will be able to understand: List features common to all forecasts, explain why forecasts are generally wrong, list elements of a good forecast, outline the steps in the forecasting process,. | Forecasting Chapter 3 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1 You should be able to: LO List features common to all forecasts LO Explain why forecasts are generally wrong LO List elements of a good forecast LO Outline the steps in the forecasting process LO Summarize forecast errors and use summaries to make decisions LO Describe four qualitative forecasting techniques LO Use a naïve method to make a forecast LO Prepare a moving average forecast LO Prepare a weighted-average forecast LO Prepare an exponential smoothing forecast LO Prepare a linear trend forecast LO Prepare a trend-adjusted exponential smoothing forecast LO Compute and use seasonal relatives LO Compute and use regression and correlation coefficients LO Construct control charts and use them to monitor forecast errors LO Describe the key | Forecasting Chapter 3 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1 You should be able to: LO List features common to all forecasts LO Explain why forecasts are generally wrong LO List elements of a good forecast LO Outline the steps in the forecasting process LO Summarize forecast errors and use summaries to make decisions LO Describe four qualitative forecasting techniques LO Use a naïve method to make a forecast LO Prepare a moving average forecast LO Prepare a weighted-average forecast LO Prepare an exponential smoothing forecast LO Prepare a linear trend forecast LO Prepare a trend-adjusted exponential smoothing forecast LO Compute and use seasonal relatives LO Compute and use regression and correlation coefficients LO Construct control charts and use them to monitor forecast errors LO Describe the key factors and trade-offs to consider when choosing a forecasting technique Chapter 3: Learning Objectives 2 Techniques assume some underlying causal system that existed in the past will persist into the future Forecasts are not perfect Forecasts for groups of items are more accurate than those for individual items Forecast accuracy decreases as the forecasting horizon increases Features Common to All Forecasts LO 3 Forecasts are not Perfect Forecasts are not perfect: Because random variation is always present, there will always be some residual error, even if all other factors have been accounted for. LO 4 The forecast should be timely should be accurate should be reliable should be expressed in meaningful units should be in writing technique should be simple to understand and use should be cost-effective Elements of a Good Forecast LO 5 Determine the purpose of the forecast Establish a time horizon Obtain, clean, and analyze appropriate data Select a forecasting technique .
