Horizontal Forecasts

Nick T. Thomopoulos ()
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Nick T. Thomopoulos: Illinois Institute of Technology

Chapter 3 in Demand Forecasting for Inventory Control, 2015, pp 23-39 from Springer

Abstract: Abstract Perhaps the most typical demand pattern is the horizontal where the month-to-month demands fluctuate above and below a path (called the level) without any trend or seasonal influence. This chapter describes five horizontal forecasting models. These forecast models are here called the following: horizontal forecast, horizontal moving average forecast, horizontal discount forecast, horizontal smoothing forecast, and forecasts using 2 stages. In all situations, the concept of raw and integer forecasts is shown. For each of the models, monthly raw forecasts are generated in fractional form. A corresponding set of forecasts is called integer forecasts and these are converted from the raw forecasts by way of the rounding algorithm. A key measure of the forecasts is the standard deviation of the 1-month forecast errors. This measure is needed subsequently when inventory decision are computed. Another useful measure, the coefficient-of-variation, is a relative way to measure the forecast error.

Keywords: Typical Demand Patterns; Forecast Error; Smoothing Forecast; Horizontal Rebars; Forecast Model (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-319-11976-2_3

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DOI: 10.1007/978-3-319-11976-2_3

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