FORECASTING

STATISTICS 2
ITESM Campus Guadalajara
Prof: Ing. Maria Luisa Olascoaga

DEFINITION OF
FORECASTING
Is predicting what will happen in
the future.
Is an estimate of the future level
of some variable
Why do we forecast?

DEFINITION OF
FORECASTING
Most companies forecast in order
to help the firm in strategic
planning activities such as:
inventory purchasing,
capacity planning,
labor planning,
etc.

NAIVE FORECASTING
TECHNIQUES
Naive forecasts: a folk
forecasting technique
In every day life situations we
forecast using very simple
technique
This technique is close to linear
trend model

NAIVE FORECASTS
The value tomorow will be the same as
today. Example: Number of visitors today
was 120. Forecast NF1 for tomorow: 120.
The value tomorow will be less (greater)
by 10%. Example: Average
temperature this month is 20 degrees.
Forecast for the next month: Temperature
will be 25 degrees (increase of 25%).

CURRENT SITUATION IN
FORECASTING
There exist a well defined set of
forecasting methods
There exists computer software
that may be quite simply
applied in forecasting
Excel program allows to solve
simple forecasting tasks

LAWS OF FORECASTING
1. Forecasts are Always Wrong: No forecasting
approach or model can predict the exact level of
the future variable. deal with the risks
2. Forecasts for the near-term tend to be more
accurate: Predicting tomorrows gas price will
likely be more accurate than predicting gas price
6 weeks from now.
3. Forecasts for groups of products or services
tend to be more accurate
4. Forecasts are no substitute for calculated
values

BASIC STEPS OF A
FORECASTING TASK
1.
2.
3.
4.
5.
6.

Defining the problem

Choosing time-series data
Analysing visually data paterns
Choosing a model
Calculating a forecast
Evaluating the forecasting accuracy,
caculating errors

FORECASTING
METHODS
STATISTICS 2
ITESM Campus Guadalajara
Prof: Ing. Maria Luisa Olascoaga

FORECASTING
Qualitative

Requires advice from experts. It is

used when there is no available or
applicable information. Used for
intermediate or long term
decisions.
Quantitativ Used for immediate or short term
e
decisions and:
1.Past information from forecasted
variable is available
2.Information can be quantified
3.Is reasonable to believe that
past behaviour will continue

FORECASTING

FORECASTING
Past Sales
Future
Sales
Past Sales + Marketing Budget
Past Grades
Future
Past Grades + Practice Time Grades

PATTERNS IN A TIME
SERIES
A time series is a sequence of
observations of a variable that are
measured during a regular period
of time (every hour, day, month or
year)
They must be mesasured with
equal intervals.

EXAMPLE OF TIME-SERIES
DATA
Number of visitors
Year

1998

Number 420

1999 2000

2001

2002

2003

450

460

470

465

440

EXAMPLE OF TIME-SERIES
DATA

PATTERNS IN A TIME
SERIES
The pattern of the data helps
us to understand the behaviour
(trend) of the information.
A graph shows
the relation
between time
and the value
of the variable

$
time

PATTERNS IN A TIME
SERIES
The pattern of the data helps
us to undersdtand the
behaviour of the information.
A graph shows
the relation
between time
and the value
of the variable

PATTERNS IN A TIME
SERIES
When trying to analyze a time series
(be it sales, promotions etc) it's good
to remember that there are four
basic patterns:
1. Horizontal (random, irregular
variation)
2. Trend (linear)
3. Periodical (cyclical, seasonal)
4. Complex (a combination of part or all
listed above

HORIZONTAL PATTERN
When the values of the time series fluctuate
around a constant mean. Stationery time
series are very easy to forecast.
Retail or Stock market?

TREND PATTERN
Consists of a long-term increase or
decrease of the values of the time series
(close to the linear growth). Trend patterns
are easy to forecast and are very profitable
when found by stock traders!

PERIODICAL PATTERN
The values of these time series are
influenced by seasonal factors. A time
series with seasonal patterns are more
difficult to forecast but not too difficult.

COMPLEX PATTERN
Are a mixture of the others.
Which patterns can you find?.

FORECASTING
METHOD
Centered
Non-centered

Moving Averages
Horizontal
Pattern

Smoothing
Method

Exponential Smoothing
Exponential Smoothing with
Adaptive Response
Linear Moving Averages

Trend
Pattern

Linear Exponential Smoothing

1 Param: Brown M.
2 Param: Holt M.

Exponential Smoothing
squared (Brown Method)
Seasonal
Pattern

Winters Method

Multiplicative Seasonality

FORECASTING
ACCURACY
What is the accuracy of a particular
forecast?
How to measure the suitability of a
particular forecasting method for a
given data set?

MEASURES TO ESTIMATE
ERRORS
To preliminary evaluate a forecast and suitability
of a method, various statistical measures may
be used.
Key concepts:
Error (e)
Mean (average) error (ME)
Mean absolute error (MAE)
Mean squared error (MSE)
Percentage error (PE)
Mean absolute percentage error (MAPE)

FORECAST ERROR
Error (e) of a forecast is measured as
a difference between the actual (A)
and forecasted values (F), that is,
e=AF
(+) undervalued: forecast under real
(-) overvalued: forecast over real

The error can be determined only

when actual (future) data are
available.

MEASURES TO ESTIMATE
ERRORS
Mean (average) error (ME)
e

ME
n

n number of

forecasted values

Not a very useful value as it

tends to compensate.
(+) : low forecasts
(-) : high forecasts

MEASURES TO ESTIMATE
ERRORS
Mean absolute error (MAE)
e

MAE
n

n number of

forecasted values

Avoids the issue of negatives and

positives.
Also known as mean absolute
deviation

MEASURES TO ESTIMATE
ERRORS
Mean squared error (MSE)

MSE

n number of

forecasted values

Also avoids the issue of negatives

and positives.
However this two measures are
affected by the scale of measurement

MEASURES TO ESTIMATE
ERRORS
Percentage error (PE)
e
PE
100
Value

Is calculated for each period of time

MEASURES TO ESTIMATE
ERRORS
Mean absolute percentage error (MAPE)
e
100

PE
value

MAPE

n
n
n number of forecasted values

Is a relative or percentual measure of

the error that allows to make
comparisons when scales are different

MEASURES TO ESTIMATE
ERRORS

MEASURES TO ESTIMATE
ERRORS

STATISTICAL MEASURES
OF GOODNESS OF FIT
In trend analysis the following measures will be
used:
1. The Correlation Coefficient (R):
Measures the strength and direction of linear relationships between two
variables. It has a value between 1 and +1. A correlation near zero
indicates little linear relationship, and a correlation near one indicates a
strong linear relationship between the two variables

1. The Determination Coefficient(R2)

measures the percentage of variation in the dependent variable
that is explained by the regression or trend line. It has a value
between zero and one, with a high value indicating a good fit.

MOVING
AVERAGE
FORECASTING
METHOD
STATISTICS 2
ITESM Campus Guadalajara
Prof: Ing. Maria Luisa Olascoaga

MAIN IDEA OF THE METHOD

The moving average uses the average
of a given number of the most recent
periods' value to forecast the value for
the next period.
Moving average smoothes down the
fluctuations in the data

SMOOTHING
Smoothing the data variation: a graphical presentation

Data
Moore smoothed data

Smoothed data

PREREQUISITE DATA
PATTERN
Moving average method is
commonly used when:
the pattern in the data does not
have periodical (seasonal or cyclic)
characteristics
is neither growing nor declining
rapidly.

FORMULA
If forecast for t period is denoted by Ft,
and the actual value of the time-series
was Yt-1 during period t-1, Yt-2 during
period t-2, etc., then k period simple
moving average is expressed as:
k most recent values Yt Yt1 ... Ytk1
Ft1

k
k

CHOOSING THE
AVERAGING PERIOD
The averaging period (value of n) must
be determined by the decision-maker.
It is important to try to select the best
period to use for the moving average.
As a general rule, the number of
periods used should relate to the
amount of random variability in
the data.
Specifically, the bigger the moving
average period, the greater the
random elements are smoothed.

EXAMPLE
Month

Number Moving
of
average
clients
(2)

January
February
March
April
May
(forecast
)

50
30
20
30

40
25
25

CALCULATION OF ERRORS:
EXAMPLE
Month

Number
of
clients

Moving
average
(2)

Error

Percentag
e error
(MAPE)

January

50

February

30

March

20

40

-20

100

April

30

25

17

7.5

58.5

May
(forecast)

25
Mean
error

EVALUATION OF MA
Advantage:
Very simple method.

Shortcomings:
Not applicable when trend exists,
No strict rule of choosing its
parameter,
The new and the old data are
treated in the same way (while, in
fact, the old data should be treated
as being less signifficant).

EXAMPLE
Certain barbecue restaurant offers an
entre of lamb on Friday. This rare dish
has been ordered by 75, 64, 68 and 70
clients during the past four weeks.
Prepare a demand forecast for the next
week using a moving average of four
periods.

Respuesta: 69.25

EXAMPLE
Ejercicio 2.

The following chart shows the price (in

En seguida se muestra el precio (en U.S. Dls.) por onza de plata en el
U.S.daDlls.)
per deounce
of unsilver
the
primer
de transacciones
cada mes. Con
promedioin
mvil
de 10first
trminos,
pronostque
el precio
de laof
plata
para el simonth.
guiente mes. With a
trading
day
each
running
average
of 10 terms,
predict
Mes
Precio de la plata
Mes
Precio de la plata
por onza
por onza
the 1price of silver
for
the
next
month..
$4.23
7
$4.46
2
3
4
5
6

4.27
4.21
3.94
4.21
4.08

8
9
10
11

4.67
4.95
4.54
4.15
Respuesta : 4.348

EXPONENTIAL
SMOOTHING
FORECASTING
METHOD
STATISTICS 2
ITESM Campus Guadalajara
Prof: Ing. Maria Luisa Olascoaga

MAIN IDEA OF THE METHOD

The exponential smoothing method main
idea is to smooth down variations in
the data. Forecast error for the
previous period is taken into
account. Time series should have
irregular variations:

EVALUATION OF ES
Advantage:
Rather simple method; More recent data are
considered as being more influential.
Requires only two data values to smooth the
future: the most recent observation, and the
most recent estimate, also requires a default
value for alpha ().
Short term - inventories

Shortcomings:
No definite rule of choosing its parameters
The value of should be determined by trial
and error. (Test different values of to find
the lowest MSE).

EVALUATION OF ES
The smoothing constant (value of ) must be
determined by the decision-maker. It is
important to try to select the one that makes
the MSE smaller.
Recomendations:
To predict long-term or smooth a series by
removal of cyclical and irregular variations, select
a small value for = 0 < <.5
high softening will occur.

To predict short term, select a value for

between 0.5 and 1.
very little smoothing

FORMULA

Ft1 Yt (1 )Ft
Ft+1= forecast for the period t + 1
Yt = real value of time series in period t
Ft = forecast for period t of time series
= smoothing constant (0 1)

EXAMPLE
Month
Number of
clients

January
February
March

40
37
43

April
May

45

Forecast
(Exponenti
al
Smoothing
)
=.02

Calculation of errors:
Example
Month

Number
of clients

January

40

February

37

March

43

April

45

May

Exponentia
l
Smoothing
Forecast
=

Error

Squared
error

EXERCISES
The sales of cars in a Ford Agency are
calculated using simple exponential
smoothing. The agency believes that the
sales have no seasonal variation or trend,
thus this method works fine. However, each
month of march the agency observes that
the forecast for March is higher than that of
february by 200 units. Supose that at the
end of february of 2002, Yt = 600. During
march of 2002, 900 cars were sold. With
= 0.6, find the expected sales of cars for
April 2002.

EXERCISES
Real
Sales Forecast
Februar
y
March

600
900

800
860

1-

0.6

0.4

April sales expected to be for 860 units

EXERCISES
A distributor of construction materials is
using exponential smoothing to forecast
the monthly demand (in tons) of a
material. For June the forecast demand
was of 130 ton, however the sales were of
135 ton. For July, the forecast was for
133.75, and 132 ton were sold. Find the
smoothing constant and forecast the
demand for August.

EXERCISES
The smoothing constant equals .75 and
the forecast the demand for August
equals 132.4375 tons.
Real
Sales

Forecast

June

135

130

July

132

133.75
132.437
5

August

ft+1=a(yt)
+ft(1-a
ft+1=ayt+ftaft
ft+1 - ft =a(ytft)
a= ft+1 - ft/
(yt-ft)
0.75
1- 0.25

EXERCISES
The weekly demand for car loans in the
Washington Federal Credit Union in the
last six weeks is shown in the table below.
1. Find using exponential smoothing the
Find:
Week

Deman
d of
loans

20

18

22

24

28

23

2.
3.
4.
5.

forecast for week seven (try constants

=0.1, 0.3 and 0.5)
Using the MSE determine which of the
three options provides the best
forecast.
Using the MAPE criteria determine
which of the three options provides the
best forecast.
Calculate and interpret the
corresponding values of the MAE.
Calculate and interpret the
corresponding values of the MPE.

EXERCISES
The weekly demand for car loans in the
Washington Federal Credit Union in the
last six weeks is shown in the table below.
Week Dema Forec
Error
AE
ES
PE
APE
Find:
nd of
loans

20

18

22

24

28

23

ast

7
MEAN

ADAPTIVE
RESPONSE
RATE
EXPONENTIAL
SMOOTHING
STATISTICS 2
ITESM Campus Guadalajara
Prof: Ing. Maria Luisa Olascoaga

MAIN IDEA OF THE METHOD

Adaptive exponential smoothing methods
allow a smoothing parameter to change
over time, in order to adapt to changes
in the characteristics of the time series.

EVALUATION OF ARRES
Advantage:
automatically adjusts the smoothing parameters based
on the forecast error.
The smoothed term is replaced by t, and the later is
adaptive over time

Shortcomings:
The underlying rationale for time varying is less clear.
as a random coefficient or autoregressive form,
depending on the nature of the process.
Another drawback for this model is that there is no
explicit way to handle seasonality.
A major flaw with smoothing models is their inability to
predict cyclical reversals in the data, since forecasts
depend solely on the past.

FORMULA

Ft1 tYt (1 t )Ft

e t = Yt Ft
Et = et + (1)Et 1 = smoothed error
Mt =letl+(1)Mt1 = abs. val. Of smoothed error
=
= 0.2, a choice variable (chosen by the

Et
Mt

decision maker)

CHOOSING THE
SMOOTHING CONSTANT
The forecasting procedure for this model can be
proceeded recursively:
1. Given the values of Yt and Ft, we can estimate et from (1).
2. The et then is plugged into (2) and (3).
3. Given the estimated value of , we can obtain t by using
(4).
4. Finally, we use t, Yt and Ft to predict Ft+1 by employing the
first equation.

1.The smoothing constant () must be determined by the

decision-maker. However, in this case = 0.2 is the
general choice.

Example

EXERCISES
A

LINEARLY
WEIGHTED
MOVING
AVERAGE
STATISTICS 2
ITESM Campus Guadalajara
Prof: Ing. Maria Luisa Olascoaga

MAIN IDEA OF THE METHOD

It calculates a second moving average
from the original moving average.

EVALUATION OF ARRES
Advantage:
This method is used to forecast series with a
linear trend line since this method handles it
better that the simpler one.
Designed to handle trending data. One set
of moving averages is calculated and then a
second set is calculated as a moving average
of the first set.
Weighted Moving Average - place more
weight on recent observations. Sum of the
weights needs to equal 1

FORMULA
First moving average

X t X t 1 X t 2 ... X t n 1
SMA M t
k

Second moving average

M t M t 1 M t 2 ... M t n 1
DMA M t
k
Difference between both moving averages

at 2 M t M t
Another adjustment constant

M t M t
bt 2
n 1

Forecast value p periods to the future

Ft p at bt p

Note: n is periods to calculate the moving

average and p is periods to forecast

Example
Time
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Rents
654
658
665
672
673
671
693
694
701
703
702
710
712
711
728

Calculate de DMA for

the following rental
information. Consider
a p=3.

Example
Time
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Rents
654
658
665
672
673
671
693
694
701
703
702
710
712
711
728

SMA
659
665
670
672
679
686
696
699
702
705
708
711
717

DMA

665
669
674
679
687
694
699
702
705
708
712

675
675
684
693
705
705
705
708
711
714
722

Forecast

5
3
5
7
9
6
3
3
3
3
5

681
678
690
700
714
710
708
711
714
717
727

Error

-10
15
4
1
-11
-8
2
1
-3
11

EXERCISES
Let 198.75 be the first linear moving
average in the period 8, and 199.93 the
value of the second moving average in
that same period. Calculate the value of
the forecast for period 9, 15 and 18.
Consider n = 4.

EXERCISES
Find the equation of the line
and the forecast for 1998, using
DMA for four periods (n=3)

BROWN METHOD
OF
FORECASTING
STATISTICS 2
ITESM Campus Guadalajara
Prof: Ing. Maria Luisa Olascoaga

MAIN IDEA OF THE METHOD

Also known as Double Exponential
Smoothing. Used to forecast a series
with a linear trend.

EVALUATION OF BROWN
Advantage:
Similar to the double moving average model.
If the trend as well as the mean is varying
slowly over time, a higher-order smoothing
model is needed to track the varying trend.
Uses two different smoothed series that
are centered at different points in time. The
forecasting formula is based on an
extrapolation of a line through the two
centers.

FORMULA
Equations

At A't Yt
At exponentially smoothed value Yt at time t
A't doubly exponentially smoothed value Yt at time t
Used for t: 2, 3.

At Yt (1 ) At 1
At' At (1 ) At'1
at 2 At At'

Yt p at bt p

where p is periods into the future

'
bt
( At At ) a is the constant value in the linear equation
1
b is the slope for the linear equation

FORMULA
Equations

Yt p at bt p
where p is periods into the future
a is the constant value in the linear equation
b is the slope for the linear equation
Uses a single coefficient, alpha, for both smoothing
operations.
Calculates the difference between single and double
smoothed values as a measure of trend (at).
It then adds this value to the single smoothed value
together with an adjustment for the current trend (bt).

EXERCISES
1. Given b4 = 1.0696 and A4 = 96.064
calculate the value of the forecast for
period five. Use =.2
2. Given the first and second observation
whose values are 94 and 90,
respectively determine the forecast for
period 3. Use =.25

Example
Find the linear equation with this method and the
forecast for period 8,10 & 15. Use =.2

Period
1
2
3
4
5
6
7
8
10
15

Yt
5.4
5.3
5.3
5.6
6.9
7.2
7.2

At

At

at

bt

HOLT METHOD

STATISTICS 2
ITESM Campus Guadalajara
Prof: Ing. Maria Luisa Olascoaga

MAIN IDEA OF THE METHOD

Is an extension of Browns double
exponential smoothing but it uses two
coefficients one for smoothng trend and
other the slope .
=is the smoothing constant for the level
= is the trend smoothing constant - used to
remove random error

MAIN IDEA OF THE METHOD

How do we find the best combination of
smoothing constant?
Low values of alpha and beta should be used
when there are frequent random fluctuations
in the data.
High values of alpha and beta should be used
when there is a pattern such as trend in the
data.

EVALUATION OF HOLT
Advantage:

Reduces the effect of randomness

(using the difference between the
averages calculated in two
successive periods).
Updates the forecasting trend.
Avoids a forecast with a reaction
delayed growth.

FORMULA
Equations:

At Yt (1 ) At1 Tt1
Tt At At1 (1 )Tt1
Ft p At Tt p

Where:
At Level of smoothed series in period t.
Tt = Slope of the series in period t.
Yt = Observed value in period t.
a is a smoothing constant
b is a smoothing constant

FORMULA
1. Start with:

A1 Y1

T1 Y2 Y1

2. Define the smoothing constants

3. Find At and Tt for all the periods
4. Find the quadratic equation

Ftp At Tt p

EXERCISES
The following table shows annual tax on
income (millions of U.S. Dlls.) paid to the
Government by residents of a city. Use the
method of Holt with
= 0.95 and = 0.5, to obtain the
forecasting equation and the forecast for
1998.

Example
Year
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009

2012

Period
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Yt
55.4
61.5
68.7
87.2
90.4
86.2
94.7
103.2
119
122.4
131.6
157.6
181
217.8
244.1

At

Tt

Ft

Example
Use the Holt method to predict the
monthly sales of DVD's in Highland
Appliance. It is known that in October
2010, At = 200 and Tt = 10. During
November 2010, 230 were sold DVD's.
Forecasts sales of DVDs for December
2010 using
= = 0.5.

Example
The method of Holt, exponential
smoothing for time trend with no
seasonal variation series, is used to
predict weekly sales of an agency Ford.
The previous to last week sales were 50
cars per week, with a trend of 6 cars per
week. 30 Cars were sold last week. After
observing the sales of the previous to last
week, predict the number of cars to be
sold during this and the next week. Use
= = 0.7. Discuss the result.

Example
The
following
table shows
the sales of
saws for the
Acme tool
Company.
These are
quarterly
sales From
2008 through
2010.

Year Quarter
2008
1
2
3
4
2009
1
2
3
4
2010
1
2
3
4

t
1
2
3
4
5
6
7
8
9
10
11
12

sales
500
350
250
400
450
350
200
300
350
200
150
400

Example
Year Quarter
1. For Holt Method
2008
1
use: = .3 and =.1
2
to predict sales for
3
2008 Q3 and 2010
4
Q2
2009
1
2. Use Brown to
2
forecast Q3 of
3
2011
4
3. Use DMA: to
forecast with a
2010
1
moving period of 4
2
Q2 2010
3
4

t
1
2
3
4
5
6
7
8
9
10
11
12

sales
500
350
250
400
450
350
200
300
350
200
150
400

QES METHOD

STATISTICS 2
ITESM Campus Guadalajara
Prof: Ing. Maria Luisa Olascoaga

MAIN IDEA OF THE METHOD

This method is used when there is
a non-linear trend in the time
series

EVALUATION OF QES
Advantage:

This technique achieves good results

when forecasting this type of series
as it uses three smoothings to
perform the calculation of forecast.

FORMULA
At Yt (1 ) At 1
At' At (1 ) At'1
At At (1 ) At1
at 3 At 3 At' At

'

bt
(
6

)
A

(
10

)
A
t
t ( 4 3 ) At
2
21

'

ct
(
A

2
A
t
t At )
2
1
1
Ft p at bt p ct p 2
2

FORMULA
1. Consider:

A1 A A1 Y1
'
1

2. Calculate the first, second and third smoothing

for t= 2,3,4,
3. Find the quadratic equation

1
2
Ftp at bt p ct p
2

EXERCISES
Calculate using = 0.1 the quadratic
equation for this model and the value for
the forecast for period 3 & 7. Having the
observed values for periods one to four:
105, 108, 111 and 103.

Example

EXERCISES
For the following exercises consider that the trend
equation is quadratic with a smoothing coefficient
: 0.3.
1.Find the equation knowing that: Y4= 9.25, A3=
8.22, A3=8.31 & A4= 8.4

2.There are only two observations for a new

product are: 8.48 & 8.06. Find the equation and
the forecast for time 4.

WINTERS
METHOD
STATISTICS 2
ITESM Campus Guadalajara
Prof: Ing. Maria Luisa Olascoaga

MAIN IDEA OF THE METHOD

Another method for forecasting that
can adequately handle the presence
of seasonality in a time series is the
Winters Method. (multiplicative
seasonality)

FORMULA
Equations:

Yt
At
(1 ) At 1 Tt 1
St L

Tt At At 1 (1 )Tt 1
Yt
St
(1 ) S t L
At
Ft p ( At Tt p ) S t L p
Where:

At Base of smoothed series in period t.

Tt = Slope of the series in period t.
St = Seasonality in period t.
Yt Forecast
L Length of seasonality

FORMULA
1. Start with:

2. Use formulas of the method

EXERCISE
Period

Sales
(Yt)

362

385

432

341

382

409

498

387

473

Level
(At)

Seasonal
Forecast
Trend (T) Index
(Ft)
(SI)

Forecast for next year (Period 7, 8 & 9) using

= 0.822 ; = 0.055 y = 0.001

EXERCISE
Sales
(Yt)

Period
1
2
3
4
5
6
7
8
9

362
385
432
341
382
409

Seasonal
Forecast
Trend (T) Index
(Ft)
(SI)
0.953
1.013
1.137
380
9.750
0.897
398.993 10.258
0.953 371.29
404.679 10.007
1.013 414.64
471.43
381.11
414.11
Level
(At)

EXERCISE
Outdoor Furniture Swings.
Usually the customers buy more swings in the hot
months than in the cold ones, so sales change with
the seasons. Suppose that the Outdoor Furniture
swings are very good and verbal advertising
increases the number of people who buy them.
Their data that reflects seasonality and trend are
given in the following table. Calculate sales for next
year using = 0.15 ; = 0.1 y = 0.2

EXERCISE
Outdoor Furniture Swings.

EXERCISE
Outdoor Furniture Swings. (L=4)

Quart
er
1
2
3
4

Year
1
60
234
163
50

2
69
266
188
59

3
84
310
212
64

EXERCISE
Use the method of Winters for a time series with
seasonality (quarters). The values registered for
the four quarters of the first year are: 57.26 66.81,
68.39 and 77.99 respectively; Likewise known
records of the four quarters of the second year are:
65.18, 74.02, 74.12 and 82.31. Use the forecasting
method to find period 9. (= 0.3, = 0.2 and =
0.2)