Forecasting (Chapter 15)

This set of flashcards covers essential vocabulary relevant to forecasting concepts, methods, and calculations based on the lecture notes.

Forecasting

The process of predicting what will occur in the future, commonly used in weather, sports, and business.

Time-frame in forecasting

The duration for which forecasts are made: short-range (1-2 months), medium-range (2 months to 1 or 2 years), and long-range (more than 1 or 2 years).

Trend

A gradual long-term up or down movement observed in data over time.

Cycle

A repeated movement up or down that occurs over a lengthy time span.

Seasonal pattern

Repetitive movement in data occurring periodically, often aligned with seasons or time of year.

Random variations

Movements in data that are not predictable and follow no discernible pattern.

Moving Average (MA)

A forecasting method that averages values from recent periods to smooth out fluctuations and identify trends.

Weighted Moving Average

An extension of the moving average method that assigns different weights to data points to emphasize more recent information.

Exponential Smoothing (ES)

A forecasting technique that applies decreasing weights to past data with more weight given to recent observations to predict future values.

Linear trend line

A statistical method used to forecast future values based on the best-fit line that represents the trend of historical data over time.

Seasonal adjustments

Techniques used to remove the effects of seasonal variations to better understand underlying trends in data.

Mean Absolute Deviation (MAD)

A measure of forecast accuracy that calculates the average of the absolute differences between forecasted and actual values.

Cumulative error

The sum of forecast errors over time, indicating direction and bias of forecasted values compared to actual outcomes.

Average error (bias)

The average of cumulative errors per period, indicating whether forecasts tend to be high or low.

Regression

A statistical method used to estimate the relationships among variables, often to predict the value of a dependent variable based on one or more independent variables.