Forecasting with Time Series Essay

1061 Words Mar 21st, 2012 5 Pages
Forecasting with Time Series
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
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However, this data can be a viable source of information that establishes a clear understanding of the organizations future. For example the organization can see the annual percentages become closer in the four years total than in years one and two. In years three and four the annual averages surpass the combined averages. This data in percentages will inform an organization of growth in demand.
The numbers forecasted suggest that the demand will decrease within five years. One may see this decrease as normal when averaging four years of inventory demand. When calculating lower- demand years with higher demand years one can anticipate the demands to be lower than a higher demand years. This can be an accurate forecast in a fluctuating market. When demands are increasing annually this leaves one to ponder whether or not a decrease in demand is accurate for the five year forecast. This forecast will rely on more substantive information.

Annual increase in inventory using the slope-intercept formula
There are different slope intercept formulas. A basic slope intercept formula is y=mx+b. This is a mathematical formula depicting y coordinate being equal to the slop times the x coordinate plus the y-intercept. Slope-intercept formula can be used to establish the yearly increase in inventory, supply monthly indices with data that was gathered, categorize slow and busy months

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