Forecasting:Techniques and Routes

Ch 3: Forecasting: Techniques and Routes Introduction Forecasting is the establishment of future expectations by the analysis of past data, or the formation of opinions. Forecasting is an essential element of capital budgeting. Capital budgeting requires the commitment of significant funds today in the hope of long term benefits. The role of forecasting is the estimation of these benefits. 1 Forecasting Techniques and Routes Technique Routes s Quantitative Qualitative Top-down route Bottom-up route Simple regressions Multiple regressions Time trends Moving averages Delphi method Nominal group technique Jury of executive opinion Scenario projection 2 Quantitative Forecasting Quantitative: Regression with related variable Data set of ‘Sales’ as related to both time and the number of households. HISTORICAL DATA YEAR HOUSEHOLDS SALES 1991 815 2109 1992 927 2530 1993 1020 2287 1994 987 3194 1995 1213 3785 1996 1149 3372 1997 1027 3698 1998 1324 3908 1999 1400 3725 2000 1295 4129 2001 1348 4532 2002 1422 4487 Quantitative Forecasting Quantitative: Sales plotted related to households. SalesUnits Related to Number of Households 5000 4000 3000 Sales 2000 1000 0 0 500 1000 1500 Number of Households 4 Quantitative Forecasting Quantitative: Sales regressed on households. SUMMARY OUTPUTut SALES REGRESSED AS A FUNCTION . Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.824389811 0.67961856 0.644020623 <== "Strength" of the regression 429.2094572 11 Coefficients Standard Error t Stat P-value Y AxisIntercept Number of Households -348.218 3.316 913.798 -0.381 0.712 0.759 4.369 0.002 5 ... - tailieumienphi.vn