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Business Forecasting 6th Edition by Holton Wilson, Barry Keating, John Solutions
Edition 6ISBN: 978-0077309305Business Forecasting 6th Edition by Holton Wilson, Barry Keating, John Solutions
Edition 6ISBN: 978-0077309305 Exercise 2
Using a modified naive forecasting method, such as the one used for total houses sold in this chapter, make a forecast of The Gap sales for the four quarters from June 2006 through March 2007. Based on inspection of the graph of The Gap sales, what is your expectation in terms of forecast accuracy?
Explanation
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The model would be: GAPF = GAPSALES(?4). GAPF represents the forecast values, while GAPSALES(?4) is the actual value four periods earlier. An inspection of The Gap sales series would lead us to expect that a naive forecasting model with a lag of four periods would pick up the seasonality as well as the recent flattening of the trend in The Gap sales. This can be seen in the graph of actual and predicted values in Figure 1.10.
FIGURE 1.10
The Gap Sales in Thousands of Dollars and a Modified Naïve Forecast
The data are quarterly so a four-quarter lag was used for a modified naive forecast. (c1t6 f10)
FIGURE 1.10 The Gap Sales in Thousands of Dollars and a Modified Naïve Forecast
The data are quarterly so a four-quarter lag was used for a modified naive forecast. (c1t6 f10)
Business Forecasting 6th Edition by Holton Wilson, Barry Keating, John Solutions
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