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QRB/501 Quantitative Reasoning for Business

February 7, 2012

Forecasting with Time Series For most companies, forecasting is very important. Their future can be determined with forecasting and this also helps pin point the problems of the past. Forecasting can be done in many methods, depending on what exactly is being forecasted. A forecasting tool used to determine demand for various commodities or goods in a given marketplace over the course of a typical year (or a shorter time period). Such an index is based on data from previous years that highlights seasonal differences in consumption. In some industries, the seasonality index experiences huge swings. (Business Dictionary, 2012) This forecasting tool is known as seasonal indexing. Find the seasonal index for summer historical inventory data below. Summer Historical Inventory Data Summer historical inventory data measures monthly figures in units four times a year. Data forecasted helps the company with inventory demands for the following year. Organizations should average a certain amount each month for a four year forecast. Organizations estimate demand for that month for the fifth year. Companies should average demands each year, and display average demands per month for that year. Data helps provide the organization, an overview with demands from one year to another year (brainmass, 2004, 2011). Organizations should identify the sequence of observation, forecasting future value, and time series variables. Patterns organize, interpret, and integrate data compiled. Helps the organization to identify, and predict future events taking place (census, 2012).

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