AMA Q22 - Chapter 2 Flashcards

1
Q

Time series definition

A

a series of values or figures recorded over time

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2
Q

What does T mean?

A

Trend

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3
Q

How is a trend noticed?

A

Evaluating whether there are moving averages in a particular value

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4
Q

SV

A

Seasonal Variation

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5
Q

How is a Seasonal Variation observed?

A

A smaller and shorter trend that counters the overall long-term trend that is predictable

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6
Q

TS

A

Time Series Forecast

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7
Q

Formula for TS

A

TS = T + SV

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8
Q

How do you calculate a trend across a moving average?

A

determine how often the seasonal variations are (must be even) and then divide each seasonal period by an individual period

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9
Q

What is the criteria for a centred moving average?

A

The seasonal variations are an even number; must not be odd

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10
Q

How do you calculate a centred moving average?

A

You average the moving average

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11
Q

formula for the Multiplicative Model

A

TS = T x SV

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12
Q

Linear Regressions

A

Predicting a value based on the assumption that a known value has a linear relationship to the unknown value

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13
Q

Index Number

A

The average change in a group of different items. Can be used to inflate/deflate future/past datasets for forecasting

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14
Q

Basket

A

An sub-group within an index number

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15
Q

Base Period (Index numbers)

A

the period in a time series that yields the index of 100

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16
Q

Index Formula

A

current period value / base period value x 100

17
Q

Cash flow deflated to previous period

A

cash flow to deflate x (previous period index number / cash flow year index number)

18
Q

What are some downsides to index forecasting?

A

The weightings of each basket item may not reflect the reality of the business
Due to frequent changes, the weightings or even make up of a basket need to be revised regularly

19
Q

Interpolation definition

A

forecasts data within a historical data range

20
Q

Extrapolation definition

A

forecasts data outside of a historical data range

21
Q

List some limitations of forecasting

A
  • Factors outside the business’ control like political, economical or market changes can alter the accuracy
  • Marketing/advertising will impact data and therefore need to be factored
  • The further the forecast, the more unpredictable and unreliable it becomes
22
Q

Two approaches of sensitivity analysis

A
  1. Calculating max change in a variable before the outcome would change
  2. Determining whether an estimated change in a variable would impact the outcome
23
Q

Pros of sensitivity analysis

A
  • easy to understand
  • highlights most important variables
24
Q

Cons of sensitivity analysis

A
  • assumes all variables are independent from each other
  • Does not assess probability
25
Q

How to calculate the seasonal variation?

A

original value less the centred moving average