Operations Management Chapter 3 Forecasting

associative model
Forecasting technique that uses explanatory variables to predict future demand.
bias
Persistent tendency for forecasts to be greater or less than the actual values of a time series.
centered moving average
A moving average positioned at the center of the data that were used to compute it.
control chart
A visual tool for monitoring forecast errors.
correlation
A measure of the strength and direction of relationship between two variables.
cycle
Wavelike variations lasting more than one year.
Delphi method
An iterative process in which managers and staff complete a series of questionnaires, each developed from the previous one, to achieve a consensus forecast.
error
Difference between the actual value and the value that was predicted for a given period.
exponential smoothing
A weighted averaging method based on previous forecast plus a percentage of the forecast error.
forecast
A statement about the future value of a variable of interest.
irregular variation
Caused by unusual circumstances, not reflective of typical behavior.
judgmental forecasts
Forecasts that use subjective inputs such as opinions from consumer surveys, sales staff, managers, executives, and experts.
least squares line
Minimizes the sum of the squared vertical deviations around the line.
linear trend equation
Ft = a + bt, used to develop forecasts when trend is present.
mean absolute deviation (MAD)
The average absolute forecast error.
mean absolute percent error (MAPE)
The average absolute percent error.
mean squared error (MSE)
The average of squared forecast errors.
moving average
Technique that averages a number of recent actual values, updated as new values become available.
naive forecast A forecast for any period that equals the previous period’s actual value.
A forecast for any period that equals the previous period’s actual value.
predictor variables
Variables that can be used to predict values of the variable of interest.
random variations
Residual variations after all other behaviors are accounted for.
regression
Technique for fitting a line to a set of points.
seasonal relative
Percentage of average or trend.
seasonal variations
Regularly repeating movements in series values that can be tied to recurring events.
seasonality
Short-term regular variations related to the calendar or time of day.
standard error of estimate
A measure of the scatter of points around a regression line.
time series
A time-ordered sequence of observations taken at regular intervals.
time-series forecasts
Forecasts that project patterns identified in recent time-series observations
tracking signal
The ratio of cumulative forecast error to the corresponding value of MAD, used to monitor a forecast.
trend
A long-term upward or downward movement in data.
trend-adjusted exponential smoothing
Variation of exponential smoothing used when a time series exhibits a linear trend.
weighted average
More recent values in a series are given more weight in computing a forecast.