Forecasting

Forecast Bias

A deviation in the forecast that is consistently higher or lower than actual demand.

Market Surveys

A forecasting method that employs questionnaires or interviews, given to potential customers, to learn about consumer behavior.

MAPE (Mean Absolute percentage Error)

A measure of the statistical variation in a forecast expressed as a percentage.

Multiplicative Seasonal Index

A method that employs a number to adjust the forecast for seasonality.

Sales Force Composite

A method where estimates from field salespeople are "rolled up" or aggregated to produce a forecast.

Naive Forecast

A method where the forecast in the new period is equal to the actual demand in the previous period.

Delphi Method

A qualitative forecasting method where opinions from experts are combined in a series of iterations that leads to convergence on a solution.

Time Series Models

A set of data that is distributed over time and exhibits one of the following patterns: seasonal, trend, cyclical, and random.

Regression Analysis

A statistical technique that expresses the functional relationship between dependent and independent variables.

Product Lifecycle Stages

The steps a new offering goes through from its introduction to its end including introduction, growth, maturity and decline.

Associative Models

Forecasting methods that use one or more variables that are believed to affect demand.

Trend Projection

A useful forecasting method when historical data exhibits an upward or downward pattern.

Coefficient of Correlation (r)

A value between -1 and 1 that is used to describe the relationship between two variables.

Coefficient of Determination (r squared)

A value between 0 and 1 that is used to express the strength of the relationship between two variables.

Quantitative Forecast

An approach for predicting demand that is based on historical data.

Qualitative Forecast

An approach for predicting demand that is based on intuition or judgmental evaluation.

Moving Average

An arithmetic mean of a certain number of the most recent observations.

Weighted Moving Average

An averaging method in which the data is adjusted or weighted according to its importance.

MAD (Mean Absolute Deviation)

The average of the absolute differences between the forecast and actual demand.

Correlation

The relationship between two sets of data such that when one changes, the other is likely to make a corresponding change. Same-direction changes are said to be positive; opposite are negative.