MGCR 472 Lecture Notes - Lecture 3: Average Absolute Deviation, Dependent And Independent Variables, Mean Squared Error
1 Feb 2017
School
Department
Course
Professor
Document Summary
In om, demand forecast is a major input to many decisions. Long-term: products/services, processes, capacity, facilities, layout, equipment, location. Short/intermediate term: operations planning, purchasing, inventory levels, workforce levels, scheduling, productions. Forecasts decisions are made continuously therefore, forecasts are needed continuously. Assumes causal system that existed in the past and will do so in the future. Forecasts are rarely (cid:862)perfect(cid:863) due to randomness. Forecasts are more accurate for groups vs. individual items. Forecast accuracy decreases as time horizon increases. Steps in forecasting process: determine purpose of forecast, establish a time horizon, gather and analyze data, select a forecasting technique, prepare the forecast, monitor the forecast. Rely solely on judgements and opinions of experts. There is not time to gather data. Time series model: use historical data to predict the future. Associative/causal models: use explanatory variables to predict the future. Opinions of managers and staff: panel consensus, delphi technique. Times series analysis: a chronological series of observations taken over time.
