EBTM 365 Chapter Notes - Chapter Chapter 3: Dependent And Independent Variables, Average Absolute Deviation, Time Series
16 Feb 2017
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Forecast- a statement about the future value of a variable of interest. Aspects of forecasts: expected level of demand, the degree of accuracy that can be assigned to a forecast (i. e. the potential size of forecast error) Allowances should be made for forecast errors: forecasts for groups of items tend to be more accurate than forecasts for individual items because forecasting errors among items in a group usually have a canceling effect. Generally speaking, short-range forecasts must contend with fewer uncertainties than longer-range forecasts, so they tend to be more accurate. Elements of a good forecast: timely, accurate, reliable, expressed in meaningful units, simple to understand and use, cost-effective. Steps in the forecasting process: determine the purpose of the forecast, establish a time horizon, obtain, clean, and analyze appropriate data, select a forecasting technique, make the forecast, monitor the forecast errors. The primary goal of operations management is to match supply to demand.
