HESA 5350 Lecture Notes - Lecture 10: Exponential Smoothing, Regression Analysis, Mathematical Model
7 Mar 2018
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Document Summary
Forecasting and selecting drivers is essential for abc method: determine relationship between driver and cost. Selecting drivers need to understand the process activity and causes of demand: usually involves a discussion with the process team. Rvu approach employing an rvu approach demands on the activities, i. e. do the activities differ from each other. Forecasting trends there are reputable public organizations that have good forecasting resources. Trend analysis regression, exponential smoothing and moving ranges. If the driver causes the activity, then the amount of activity and the cost must have a correlation. The closer the r2 is to 1, the more accurate it is. Exponential smoothing assumes recent changes in cost are more indicative of near future forecasts, than long-term trends. It assumes there are random variation in short- term changes. Learning curves mathematical model based on principle that as technology and people learn, costs will decrease. Either technology or processes become more efficient leading to reduced cost.
