BU385 Lecture Notes - Lecture 4: Average Absolute Deviation, Mean Squared Error, Squared Deviations From The Mean
Document Summary
Demand forecast the estimate of expected demand during a specified future period. Features common to all forecasts: forecasting techniques generally assume that the same underlying causal system that existed in the past will continue to exist in the future, forecasts are rarely perfect; actually results usually differ from predicted values. No one can predict precisely how related factors will impinge upon the variable in question. Allowances should be made for inaccuracies: forecasts for groups of items tend to be more accurate than forecasts for individual items. Ex. forecast for total sales of a new t shirt will be more accurate than the forecast for each size/colour: forecast accuracy decreases the farther the forecasted time period is into the future. Forecasting horizon the range of time periods we are forecasting for. Steps in the forecasting process: determine the purpose of the forecast. There are two general approaches to forecasting: judgemental and quantitative.
