Chapter 3 Forecasting

1. 1. a statement about the future value of a variable of interest.

• Prediction
• Estimation
• Forecast
• Projection

2. 2. Two important aspects of forecast such as:

• Speed and efficiency
• Cost and time
• Expected level of demand

• Accuracy

3. 3. There are two uses for forecast:

• Plan the system

• Market analysis and research
• Plan the use of the system

• Employee performance evaluation

4. 4. Feature common to all forecast

• Techniques assume some underlying causal system that existed in the past will persist into the future.

• Forecast are not perfect

• Forecast for groups of items are more accurate than those for individuals items.

• Forecast accuracy decrease as the forecasting horizon increase.

5. 5. The following are elements of a good forecast except:

• Timely and Accurate

• Reliable and Expressed in meaningful units

• In writing and simple to understand

• cost-effective

• Establish a time horizon

6. 6. 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 and Monitor the forecast

7. 7. Different between the actual value and the value that was predicted for a given period.

• Estimation gap
• Prediction variance
• Value deviation
• error

8. 8. MAD means:

• Mean Absolute Deviation
• Median Absolute Deviation
• Mean Average Deviation
• Mean Absolute Difference

9. 9. MSE stand for:

• Maximum Squared Error
• Mean Squared Error
• Mean Squared Estimate
• Mean Standard Error

10. 10. MAPE mean:

• Mean Absolute Performance Evaluation
• Mean Absolute Percentage Error
• Mean Adjusted Percentage Error
• Mean Average Percentage Error