Compare the forecasting methods, Corporate Finance

Assignment Help:

In this section, we will compare the ?ve forecasting methods using the case study data described in Section 4. Methods 1-3 will ?rst be compared for the full data set (assortment groups 1-3) and in their forecasting accuracy for Season 2 (based on Season 1) and Season 3 (based on Season 2). Then, for Assortment group 1 and Season 3, Methods 1-3 will also be compared to Methods 4 and 5 based on expert judgment.

We used three different performance measures of forecast accuracy: mean absolute percentage error (MAPE), mean absolute deviation (MAD) and mean percentage error (MPE). The comparative performance of the different methods was consistent over the three error measures, and hence we report the results for MAPE only. We remark that we did not consider the mean square error (MSE) because of its sensitivity to outliers.

We report overall results (per year) as well as for classes of SKUs that are based on the value of the preview demand P. The classes that we use are P =0, 0< P 6 2, 2 < P 6 5, 5 < P 6 10, P > 10. We use this classi?cation, since we expect that higher preview demands will imply more reliable statistical extrapolations of that demand, and will therefore in?uence the relative performance of the different methods, especially statistical (Methods 1-3) versus expert judgment (Methods 4-5). We remark that the overall results exclude SKUs with P = 0, i.e. report the average over all SKUs with positive preview demand. This is done because some of the methods will always result in a zero forecast for these SKUs, and their inclusion would therefore reduce the meaningfulness of the overall results.


Related Discussions:- Compare the forecasting methods

How do mergers affect communities, How do mergers affect communities? A:...

How do mergers affect communities? A: When a locally controlled bank is merged into a bank headquartered elsewhere (an out-of-market merger), some apprehension about the instit

Calculate the present value and the duration of liabilities, Question: ...

Question: (a) In any year, the rate of interest on funds invested with a given insurance company is independent of the rates on interest in all previous years. Each year th

What is phoenix activity, Q. What is phoenix activity? Phoenix activity...

Q. What is phoenix activity? Phoenix activity is "the evasion of tax and other liabilities, such as employee entitlements, through the deliberate, systematic and sometimes cycl

Calculate the current price, a) Cookie Monster Inc. (a $15 billion snack fo...

a) Cookie Monster Inc. (a $15 billion snack food company) is considering acquiring Keebler Elves but is unsure of how much is should be willing to pay for the target firm.  At the

Short term finance, mystore retail has about $200 000 in credit sales each ...

mystore retail has about $200 000 in credit sales each month.mystore factors all these invoices at a 5% fee.what is the effective annual (%) cost of this action?

Securitization- technique of bundling and off-loading risks, Question: ...

Question: (a) i. Expected loss= Exposure amount* probability of default* loss given default ii. Positive covenants= covenants that showing the direction to a company. P

Homework Help, Please explain and help me with a homework question about pe...

Please explain and help me with a homework question about percent of sales method

Cash flow from an income statement, Describe how to build a cash flow from ...

Describe how to build a cash flow from an income statement.

The pure-play approach, Hydra Multinational is a vast conglomerate firm inv...

Hydra Multinational is a vast conglomerate firm involved in a wide array of business ventures ranging from satellite radio to cat food.  One of its many divisions, a restaurant cha

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd