Forecasting

1
Forecasting

• MBA/510

2
Objectives

• Describe the use of time series analysis and
  forecasting in making business decisions
• Apply time series analysis and forecasting

3
Much like Forecasting Weather

• Persistence Method
• today equals tomorrow

4
Trends and other methods

• Climatology
• Analogue
• Numerical
• weather
• prediction

5
Much like forecasting
Average Absorption Time
40
34.6
30
Seconds
20
5.8
10
3.6
0
267
576
1562
Droplet size (microns)
(Hours)
6
What we Now Expect

• Technical Review
• 40 Concrete and Asphalt
• 120 Painted Surfaces
• 55 Grass
• 10 Thickened Agent
• Recent live agent surface tests
• DTest (1998 - 1999)
• C Tests (1999)
• N Test (1999)

7
What about Business forecasting?
8
Heban Lumber Mill (exercise 19.1)
Earnings in dollars

• Plot the data on a chart.
• Estimate the linear trend equation by drawing a
  line through the data.
• Estimate the earnings per share for 2004.

9
Heban Lumber Mill (exercise 19.1)
Sales went up 2.67 1.56, or 1.11 in 4
years (2001 1997). Thus (1.11 4) 0.2775 or
0.30
Y'1.000.30t
Y' a bt
Y' 1.00 bt
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Heban Lumber Mill (exercise 19.1)

• The estimated earnings for 2004 are
• 3.10

11
Norton Company (Exercise 19.3)

• The quarterly sales for the Norton Company are
  given in millions of dollars for four years.
  Compute the quarterly seasonal index using the
  ratio-to-moving-average method.

Full Table
12
Norton Company (Exercise 19.3)
Full Table
13
Summary of MBA/510

• Secondary and primary research
• Tools of data analysis
• Levels of measurement
• Sampling size methods
• Descriptive data Probability
• Normal distribution
• Confidence intervals
• Hypothesis Testing Variables
• ANOVA F-distribution
• Linear regression Correlation analysis
• Time series analysis Forecasting