Chapter 12 - Forecasting Flashcards
Adjusted Exponential Smoothing
an exponential smoothing forecast adjusted for trend.
Average Error
the cumulative error averaged over the number of time periods.
Coefficient of Determination
the correlation coefficient squared; it measures the portion of the variation in the dependent variable that can be attributed to the independent variable.
Correlation
a measure of the strength of the causal relationship between the independent and dependent variables in a linear regression equation.
Cumulative Error
a sum of the forecast errors; also known as bias.
Cycle
an up-and-down movement in demand over time.
Delphi Method
a procedure for acquiring informed judgements and opinions from knowledgeable individuals to use as a subjective forecast.
Exponential Smoothing
an averaging method that weights the most recent data more strongly than more distant data.
Forecast Error
the difference between actual and forecasted demand.
Linear Regression
a mathematical technique that relates a dependent variable to an independent variable in the form of a linear equation. y=mx +b
Linear Trend Line
A forecast using the linear regression equation to relate demand to time.
Long-Range Forecast
a forecast encompassing a period longer than two years into the future.
Mean Absolute Deviation (MAD)
the per-period average of the absolute difference between actual and forecasted demand.
Mean Absolute Percent Deviation (MAPD)
The absolute forecast error measured as a percentage of demand.
Mean Squared Error (MSE)
The average of the squared forecast errors.
Moving Average
average demand for a fixed sequence of periods including the most recent period.
Multiple Regression
A mathematical relationship that relates a dependent variable to two or more independent variables.
Qualitative Forecast Methods
non-quantitative, subjective forecasts based on judgement, opinion, experience, and expert opinion.
Quantitative Forecast Methods
Forecasts derived from a mathematical formula.
Random Variations
Movements in demand that are not predictable and follow no pattern.
Regression Forecasting Methods
a class of mathematical techniques that relate demand to factors that cause demand behavior.
Seasonal Factor
A numerical value that is multiplied be the normal forecast to get a seasonally adjusted forecast.
Seasonal Pattern
An oscillating movement in demand that occurs periodically in the short run and is repetitive.
Short to Mid-Range Forecast
a forecast encompassing the immediate future, usually days or weeks, but up to two years.
Smoothing Constant
The weighting factor given to the most recent data in exponential smoothing forecasts.
Time Frame
how far into the future something is forecasted.
Time Series Methods
A class of statistical methods that uses historical demand data over a period of time to predict future demand.
Tracking Signal
a measure computed by dividing the cumulative error by MAD;
used for monitoring bias in the forecast.
Trend
a gradual, long-term up or down movement of demand.
Weighted Moving Average
a moving average with more recent data demand values adjusted with weights.
