Full Download Forecasting and Predictive Analytics With Forecast X 7th Edition Keating Solutions Manual
Full Download Forecasting and Predictive Analytics With Forecast X 7th Edition Keating Solutions Manual
Full Download Forecasting and Predictive Analytics With Forecast X 7th Edition Keating Solutions Manual
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-7th-edition-keating-solutions-manual/
The earliest phase in the evolution of forecasting was when all forecasts were purely judgmental.
Forecasts were based solely on the intuition of managers who had to predict how much would be
sold, or how much inventory to order, or how many people to hire (or all of these). Later
quantitative methods and forms of numerical analyses started to be used to make predictions.
Methods such as moving averages and simple exponential smoothing were followed by more
sophisticated time series methods such as Holt’s and Winters’ exponential smoothing. Linear
time trends came into use, at first by an analysts drawing freehand lines through the data that
they “believed” best represented the trend in the data. Later basic regression tools were used for
such simple time trends. As quantitative methods became more sophisticated, and as computer
power enabled their use, quantitative forecasting became dominant and has been shown to
outperform qualitative methods most of the time. We are now into the “big data” phase in which
we have not only the ability to use numeric data but have immense amounts of non-numeric data
that can contribute to the accuracy of predictions.
2. How does the organization of the material in this book relate to the stages of the
evolution of prediction?
The text is organized around three major themes: 1) Time Series Models; 2) Demand Planning
Models; and 3) Analytics. The text has an overview of some qualitative methods but the real
powerful forecasting methods begin in Chapters 3 and 4 that focus on various time series
methods. Chapter 5 delves heavily into causal models using multiple regression that can include
variables over which the organization has partial or total control. Chapters 6 and 7 continue the
demand planning section. Then in Chapter 8 predictive analytics take center stage. This is the
new frontier of prediction and forecasting.
3. Write a paragraph in which you compare what you think are the advantages and
disadvantages of subjective forecasting methods. How do you think the use of
quantitative methods relates to these advantages and disadvantages?
One advantage of subjective forecasting is that this class of methods does not require quantitative
skill on the part of the forecaster or the user. Historically, a related advantage was that
sophisticated computer software is not needed for subjective forecasting. In addition, the results
of subjective forecasts were widely accepted by management. This acceptance may have been
due to the ability of successful forecasters to sense changes based on a subjective understanding
of the business/economic environment. Unfortunately it takes years for a forecaster to learn to
translate intuition into a reliable forecast. The ability to make subjective forecasts is very
difficult to transfer to other individuals which means that when that forecaster retires or moves to
another position forecast accuracy typically suffers. Thus, over time consistency in forecast
For a supply chain to function efficiently all the participants along the chain must have accurate
forecasts in order to plan production and distribution. Consider a firm that makes seats for a
major auto manufacturer. This firm needs a reliable forecast of the production of vehicles so that
they can plan their raw material and human resource requirements.
5. The process of forecasting new products is difficult. Why? How can new products be
forecast?
The biggest hurtle to overcome in new product forecasting is the lack of historical data. In the
most extreme case of a totally new product there is no historical data that can be used to help
develop a forecast. Often a new product is not completely new to the market. There may be
similar products on the market for which there is a body of data that might be useful. Consider
the newest iPhone. Apple has historical data on previous versions of the iPhone that can be a
guide to expected sales of the newest model. When a product is totally new a firm can rely on
marketing research in the form of test markets and product clinics to develop estimates of future
sales. Once the product is introduced and a few data points have been observed the Bass model
may be useful. Products typically follow a product life cycle which provides a framework for
developing sales estimates.
6. In this chapter, you saw an example of a naive forecast. Why do you think it is given that
name? Describe how the naive forecast is developed.
Naïve forecasts are given that name because they simply assume that the next period will be the
same as the current period. This is truly a naïve assumption. Most people use a naïve forecast in
their daily lives. In the absence of a weather forecast, it is not uncommon to think that the
weather tomorrow will be the same as it is today. Most of the time this works well enough in the
very short term but such a forecast becomes absurd in a longer term. It is likely that the weather
on January 15 will be similar to the weather January 14th. But extending that reasoning six
months ahead the June 15 would be unreasonable. In the simplest form a naïve forecast takes
today’s sales as the forecast for tomorrow’s sales. That is the forecast for time period t+1 is the
actual value at time period t.
7. In the chapter, you learned about many metrics that can be used to evaluate forecast
accuracy. The MAPE was one of those that may be the most common in use. Explain
what the MAPE tells a forecaster.
MAPE stands for “Mean Absolute Percentage Error.” The MAPE is one form of an average
error in a forecast over a specific period of time. Because the absolute value of the errors are
used in the calculation it is not possible for positive errors to offset negative errors. Suppose you
have a forecast for four quarters with errors of 100. 50, -225, and 175. Calculating a simple
average would tell you that on average there was zero error. In fact this is quite obviously not
Absolute Absolute
Actual Forecast Error Error % Error
400 300 100 100 25.00
200 150 50 50 25.00
500 725 -225 225 45.00
400 225 175 175 43.75
MAPE = 34.69
The MAPE for the same four periods would be 34.69 which would be a better indication of the
true errors in the forecast and would not mislead a manager into thinking the forecasts had all
been perfect. MAPE is also unit free since it is calculated as a percent. Thus, the MAPE can be
compared across different forecast items.
8. Suppose that you work for a U.S. senator who is contemplating writing a bill that would
put a national sales tax in place. Because the tax would be levied on the sales revenue of
retail stores, the senator has asked you to prepare a forecast of retail store sales for year 8,
based on data from year 1 through year 7. The data are:
1. Use the naive forecasting model presented in this chapter to prepare a forecast of retail
store sales for each year from 2 through 8.
Retail Naïve
Year Store Sales Forecast
1 1,225
2 1,285 1,225
3 1,359 1,285
4 1,392 1,359
5 1,443 1,392
II.
(DE «LA MONJA ALFÉREZ», DE CARLOS COELLO).
APÉNDICES
Proposición de la Alcaldía para trasladar los restos de Pizarro.
«Considerando: Que es de dignidad nacional dar honrosa
sepultura á los restos del conquistador del Perú, que hoy se
encuentran en la bóveda de la Iglesia Catedral,
«Propone: Que se autorice á la Alcaldía para que solicite del Ilmo.
y Rmo. Sr. Arzobispo y del Cabildo metropolitano la licencia
correspondiente para colocar los restos del Capitán general D.
Francisco Pizarro en una de las capillas de la Iglesia Catedral,
quedando autorizada igualmente la Alcaldía para hacer construir
una urna donde reposen estos restos, hasta que la nación pueda
construir un monumento para tal objeto.
«Lima, Abril 30 de 1891.—Juan Revoredo.»
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Discurso del Alcalde de Lima al entregar la urna que debía
guardar los despojos mortales de Pizarro.
«Excelentísimo Señor:
«Señor Ilustrísimo:
«Señores:
«Conmemoramos en este momento el aniversario del
fallecimiento del ilustre Capitán general D. Francisco Pizarro,
acaecido hace hoy trescientos cincuenta años.
«Nos encontramos en presencia de sus restos, de cuya
autenticidad no podemos dudar desde que la Historia así nos lo
demuestra y desde que las generaciones que se han venido
sucediendo nos los han ido haciendo conocer de padres á hijos
hasta llegar á nosotros.
«Don Francisco Pizarro fué el conquistador del Perú, el fundador
de esta capital, el que en sus propios hombros cargó el primer
madero que sirvió para la fabricación del templo en que nos
encontramos, y, lo que es más, fué el que nos legó la Religión que
profesamos, dándonos hasta su última hora pruebas del respeto y
de la veneración que tenía por ella; pues recordaréis que besando la
Cruz del Calvario, que con su propia sangre y puño había formado
para elevar sus preces al Todopoderoso, exhaló su último aliento.
Estamos obligados á creer, señores, que el alma del que así murió
tiene que estar gozando de las delicias del Paraíso.
«Toca á nosotros honrar sus inapreciables restos, que continuarán
bajo la custodia del Muy Ilustre Cabildo metropolitano.»
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