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FMIS 3301
Forecasting Chapter 4
30
Finance
Undergraduate 2
02/28/2010

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Term
Forecasting
Definition
The art and science of predicting future events.
Term
Economic forecasts
Definition
Planning indicators that are valuable in helping organizations prepare medium- to long-range forecasts
Term
Technology Forecasts
Definition
Long-term forecasts concerned with the rates of technological progress
Term
Demand forecasts
Definition
Projections of a company's sales for each time period in the planning horizon
Term
Quantitative forecasts
Definition
Forecasts that employ one or more mathematical models that rely on historical data and/or casual variables to forecast demand.
Term
Qualitative Forecasts
Definition
Forecasts that incorporate such factors the decision maker's intuition, emotions, personal experiences, and value system.
Term
Jury of executive opinion
Definition
A forecasting technique that takes the opinion of a small group of high-level managers and results in a group estimate of demand
Term
Delphi Method
Definition
A forecasting technique using a group process that allows experts to make forecasts.
Term
Sales Force Composite
Definition
A forecasting technique based on salespersons' estimates of expected sales.
Term
Consumer Market Survey
Definition
A forecasting method that solicits input from customers or potential customers regarding future purchasing plans.
Term
Time Series
Definition
A forecasting technique that uses a series of past data points to make a forecast.
Term
Naive approach
Definition
A forecasting technique that assumes demand in the next period is equal to demand in the most recent period.
Term
Moving Averages
Definition
A forecasting average of the n most recent periods of data to forecast the next period.
Term
Exponential smoothing
Definition
A weighted-moving-average forecasting technique in which data points are weighted by an exponential function
Term
Smoothing Constant
Definition
The weighting factor used in an exponential smoothing forecast, a number between 0 and 1
Term
Mean Absolute Deviation (MAD)
Definition
A measure of the overall forecast error for a model.
Term
Mean Squared Error (MSE)
Definition
The average of the squared differences between the forecasted and observed values.
Term
Mean absolute percent error (MAPE)
Definition
The average of the absolute differences between teh forecast and actual alues, expressed as a percent o factual values.
Term
Trend Projection
Definition
A time-series forecasting method that fits a trend line to a series of historical data points and then prejects the line into the future for forecasts.
Term
Seasonal Variations
Definition
Regualr upward or downward movements in a timer series that tie to recurring events.
Term
Cycles
Definition
Patterns in the data that occur every several years.
Term
Linear-regression analysis
Definition
A straight-line mathematical model to describe the functional relationships between independent and dependent variables
Term
Standard error of the estimate
Definition
A measure of variablility around the regression line - its standard deviation
Term
Coefficient of Correlation
Definition
A measure of the strength of the relationship between 2 variables.
Term
Coefficient of determination
Definition
A measure of the amount of variation in the dependent variable about its mean that is explained by the regression equation.
Term
Multiple regression
Definition
An associative forecasting method with more than one independent variable
Term
Tracking Signal
Definition
A measurement of how well forecast is predicting actual values
Term
Bias
Definition
A forecast that is consistently higher or consistently lower than actual values of a time series
Term
Adaptive Smoothing
Definition
An approach to exponential smoothing forecasting in which the smoothing constatn is automatically changed to keep erros to a minimum
Term
Focus Forecasting
Definition
Forecasting that tries a variety of computer models and selects the best one for a particular application
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