Idea Transcript
Managerial Economics in a Global Economy, 5th Edition by Dominick Salvatore Chapter 5 Demand Forecasting
Prepared by Robert F. Brooker, Ph.D.
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 1
Qualitative Forecasts • Survey Techniques – Planned Plant and Equipment Spending – Expected Sales and Inventory Changes – Consumers’ Expenditure Plans
• Opinion Polls – Business Executives – Sales Force – Consumer Intentions Prepared by Robert F. Brooker, Ph.D.
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 2
Time-Series Analysis • Secular Trend – Long-Run Increase or Decrease in Data
• Cyclical Fluctuations – Long-Run Cycles of Expansion and Contraction
• Seasonal Variation – Regularly Occurring Fluctuations
• Irregular or Random Influences Prepared by Robert F. Brooker, Ph.D.
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 3
Prepared by Robert F. Brooker, Ph.D.
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 4
Trend Projection • Linear Trend: St = S0 + b t b = Growth per time period • Constant Growth Rate St = S0 (1 + g)t g = Growth rate • Estimation of Growth Rate lnSt = lnS0 + t ln(1 + g) Prepared by Robert F. Brooker, Ph.D.
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 5
Seasonal Variation Ratio to Trend Method Actual Ratio = Trend Forecast Seasonal Average of Ratios for = Adjustment Each Seasonal Period Adjusted Forecast Prepared by Robert F. Brooker, Ph.D.
Trend = Forecast
Seasonal Adjustment
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 6
Seasonal Variation Ratio to Trend Method: Example Calculation for Quarter 1 Trend Forecast for 1996.1 = 11.90 + (0.394)(17) = 18.60 Seasonally Adjusted Forecast for 1996.1 = (18.60)(0.8869) = 16.50
Year 1992.1 1993.1 1994.1 1995.1
Prepared by Robert F. Brooker, Ph.D.
Trend Forecast Actual 12.29 11.00 13.87 12.00 15.45 14.00 17.02 15.00 Seasonal Adjustment =
Ratio 0.8950 0.8652 0.9061 0.8813 0.8869
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 7
Moving Average Forecasts Forecast is the average of data from w periods prior to the forecast data point. w
Ft i 1
Prepared by Robert F. Brooker, Ph.D.
At i w
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 8
Exponential Smoothing Forecasts Forecast is the weighted average of of the forecast and the actual value from the prior period. Ft
1
wAt
(1 w) Ft
0 w 1 Prepared by Robert F. Brooker, Ph.D.
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 9
Root Mean Square Error Measures the Accuracy of a Forecasting Method
RMSE
Prepared by Robert F. Brooker, Ph.D.
( At
Ft )
2
n
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 10
Barometric Methods • • • • • • •
National Bureau of Economic Research Department of Commerce Leading Indicators Lagging Indicators Coincident Indicators Composite Index Diffusion Index
Prepared by Robert F. Brooker, Ph.D.
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 11
Econometric Models Single Equation Model of the Demand For Cereal (Good X) QX = a0 + a1PX + a2Y + a3N + a4PS + a5PC + a6A + e QX = Quantity of X
PS = Price of Muffins
PX = Price of Good X
PC = Price of Milk
Y = Consumer Income
A = Advertising
N = Size of Population
e = Random Error
Prepared by Robert F. Brooker, Ph.D.
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 12
Econometric Models Multiple Equation Model of GNP Ct
a1 b1GNPt
It
a2 b2
GNPt
Ct
It
t 1
u1t u2 t
Gt
Reduced Form Equation GNPt Prepared by Robert F. Brooker, Ph.D.
a1 a2 1 b1
b2
t 1
1
b1
Gt 1 b1
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 13
Input-Output Forecasting Three-Sector Input-Output Flow Table Producing Industry Supplying Industry A B C Value Added Total
Prepared by Robert F. Brooker, Ph.D.
A 20 80 40 60 200
B 60 90 30 120 300
C 30 20 10 40 100
Final Demand 90 110 20
Total 200 300 100 220
220
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 14
Input-Output Forecasting Direct Requirements Matrix Direct Requirements
=
Input Requirements Column Total Producing Industry
Supplying Industry A B C
Prepared by Robert F. Brooker, Ph.D.
A 0.1 0.4 0.2
B 0.2 0.3 0.1
C 0.3 0.2 0.1
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 15
Input-Output Forecasting Total Requirements Matrix Producing Industry Supplying Industry A B C
Prepared by Robert F. Brooker, Ph.D.
A 1.47 0.96 0.43
B 0.51 1.81 0.31
C 0.60 0.72 1.33
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 16
Input-Output Forecasting Total Requirements Matrix 1.47 0.96 0.43
Prepared by Robert F. Brooker, Ph.D.
0.51 1.81 0.31
0.60 0.72 1.33
Final Total Demand Demand Vector Vector 90 110 20
=
200 300 100
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 17
Input-Output Forecasting Revised Input-Output Flow Table Producing Industry Supplying Industry A B C
Prepared by Robert F. Brooker, Ph.D.
A 22 88 43
B 62 93 31
C 31 21 10
Final Demand 100 110 20
Total 215 310 104
Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 18