(Forecasting Method)

FORECASTING
Forecasting is a prediction of what will
occur in the future.
Although impossible to predict future
exactly
forecast can provide guidelines for
decision making

Time Series Analysis

what happen in the past will happen in the

future

Moving Average

The forecast for the next period base on

the arithmetic average of the sum all new
demands priods

Moving Average

Computed for
specific period

MA5

D
i 1

90 110 130 75 50

91
5

Moving Average With POM

3 Month

5 Month

Weighted Moving Average

The weights must (adding up to time .priode)

Weighted Moving Average

Ft = w1A t-1 + w 2 A t-2 + w 3A t-3 +...+w n A t-n

Determine the 2-period

weighted moving average
forecast for period 6 ?

F6 = .5 (325) + .4(300)/9 =313,8889

8

Exercise: Solution

Exponential Smoothing

The forecast is the sum of the previous forecast and

constant (difference the previous demand and
the previous forecast )

Ft = Ft-1 + (At-1-Ft-1)

The smoothing constant, , must be

between 0.0 and 1.0

10

Exponential Smoothing
Example

Week
1
2
3
4
5
6
7
8
9
10

Demand
820
775
680
655
750
802
798
689
775

Determine
exponential
smoothing
forecasts for 10
periods through
using =0.10 and
=0.60.

11

Exponential Smoothing
Example

?
12

Exponential Smoothing :
Solution
Ft = Ft-1 + a(At-1 - Ft-1); a = 0.1
F1=D1
F2=(820) + 0.1(820 820)
= 820
F3=(820) + 0.1(775 820)
= 815,50
F4 = ? ; F5 = ?; F6 = ?;
F7 = ?; F8 = ?; F9 = ?
F10 =(776.88) + 0.1(775 776.88)
=776,69

13

Exponential Smoothing :
Solution
Ft = Ft-1 + a(At-1 - Ft-1); a = 0.6
F1=D1
F2=(820) + 0.6(820 820)
= 820
F3=(820) + 0.6(775 820)
= 793
F4 = ? ; F5 = ?; F6 = ?;
F7 = ?; F8 = ?; F9 = ?
F10 =(728.1989) +
0.6(775 728.1989)
=756,27

14

Linear Regression

Regression Equation
This model is of the form:
Y = a + bX
Y = dependent variable
X = independent variable
a = y-axis intercept
b = slope of regression line

15

Linear Regression

EXAMPLE

Forecasting ?

16

Linear Regression

Constants a and b
The constants a is computed using the
following equations:

x y- x xy

a=
n x -( x)
2

a = ((506 * 950) (66 * 5205))/(( 11 * 506)(66

66))
a = *((480700)(343530))/((5566)-(4356))
=
137170/1210
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Linear Regression

Constants a and b
The constants b is computed using the following
equations:

b=

n xy- x y
n x -( x)
2

b = ((11 * 5205) (66 * 950))/(( 11 * 506)(66

66))
b = *((57255)(62700))/((5566)-(4356))
=
-5455/1210

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Linear Regression

Regression Equation
Y = a + bX

19

Linear Regression With

POM

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Example: Linear Regression

Suatu Perusahaan mengeluarkan biaya untuk
pembelian peralatan komputer selama 6 tahun sbb:

Year
1
2
3

Biaya
(Ratus Juta)
2.5
2.8
2.9

Year
4
5
6

Biaya
(Ratus Juta)
3.2
3.3
3.4

Hitung Keuntungan Yang diperoleh th 1 s/d 12

21

Example: Linear Regression

x
1
2
3
4
5
6

y
2.5
2.8
2.9
3.2
3.3
3.4

x2
1
4
9
16
25
36

xy
2.5
5.6
8.7
12.8
16.5
20.4

x=21

y=18.1

x2=91

xy=66.5
22

Example:
91(18.1) 21(66.5)
a
2.387
2
6(91) (21)
6(66.5) 21(18.1)
b
0.180
105
Y = 2.387 + 0.180X
23

Example:
Y7 = 2.387 + 0.180(7) = 3.65 or 3.650.000
Y8 = 2.387 + 0.180(8) = 3.83 or 3.830.000
Y9 = 2.387 + 0.180(9) = 4.01 or 4.010.000

24

Example: WITH POM

?
25

Example: Linear Regression

System Benefit
Year
(millions)
1
9.5
2
11.0
3
12.0
4
12.5
5
14.0
6
16.0
7
18.0

Other Benefit
(millions)
120
135
130
150
170
190
220
26

Example: Linear Regression

x

x2

xy

120
135
130
150
170
190
220

9.5
11.0
12.0
12.5
14.0
16.0
18.0

14,400
18,225
16,900
22,500
28,900
36,100
48,400

1,140
1,485
1,560
1,875
2,380
3,040
3,960

1,115 93.0 185,425 15,440

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Example: Linear Regression

185,425(93) 1,115(15,440)
a
0.528
2
7(185,425) (1,115)
7(15,440) 1,115(93)
b

0.0801
2
7(185,425) (1,115)
Y = 0.528 + 0.0801X
Y1

= 0.528 + 0.0801(120) = $10.1393 million

28

Example: WITH POM

29

Monitoring Accuracy

Accuracy can be measured in several ways

Mean absolute deviation (MAD)

Mean squared error (MSE)

30

Mean Absolute Deviation

(MAD)
n

MAD =

Actual demand - Forecast demand

i =1

n
nn

(A - F )
ii

MAD

ii

ii
11

n
31

Example-MAD

Determine the MAD for the forecast ?

32

Solution
Month
1
2
3
4
5

Demand
220
250
210
300
325

Forecast Abs Error

11
209
235
15
51
261
287
13
313
12
102

33

Solution POM

34

Mean Squared Error (MSE)

2

MSE =

Determine the MSE forecast ?

35

Solution
Month
1
2
3
4
5

Demand
220
250
210
300
325

Forecast Abs Error (Abs Error) 2

11
209
121
15
235
225
261
51
2601
169
287
13
144
12
313
102

3260

MSE = 3260/5 =652

36

Solution POM

37

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

Demand
650
678
720
785
859
920
850
758
892
920
789
844

Tentukan Forecasting dalam

bentuk:
1. Moving Average untuk priode 4
minggu
2. Weighted Moving Average untuk
forcasting priode 13 untuk 4
periode
3. Exponential Smoothing dng a =0,5
untuk forcasting 13
4. Linear Regression untuk:
- forcasing 2, 10 dan 13
- MAD
- MSE
38