OIM 301 Lecture 2: lecture 2

• School: UMASS-Amherst
• Department: Operations & Info Management
• Course: OIM 301
• Professor: Michele Burch

Document Summary

Forecasting: process of predicting a future event, underlying basis of all business decisions. Up to 1 year, generally less than 3 months. Purchasing, job scheduling, workforce levels, job assignments, production levels: medium range forecast. Sales and production planning, budgeting: long range forecast. Used when situation is vague and little data exist. Pool opinions of high-level experts, sometimes augment by statistical models: 2. Panel of experts, queried iteratively: 3. Estimates from individual salespersons are reviewed for reasonableness, then aggregated: 4. Used when situation is (cid:494)stable(cid:495) and historical data exist. Forecasting sales of color televisions: time-series models. Time series forecasting: set of evenly spaced numerical data. Obtained by observing response variable at regular time periods: forecast based only on past values, no other variables important. Assumes that factors influencing past and present will continue influence in future: components: Trend: the gradual upward or downward movement of the data over time. Seasonality: the data pattern that repeats itself periodically.