Priori forecasting, Corporate Finance

Assignment Help:

Chang and Fyffe (1971) assume that a ?rm has a ''long-run sales history of individual seasonal-style-goods SKUs or groups of such SKUs''. They propose to estimate demand by using regression on those historic sales, also based on the ''outcome of some observable variable''. However, they do not explain in detail how that can be done nor do they test the method using real data. It seems dif?cult to apply this method in the apparel industry, as long-run sales histories of very similar products are rare.

Chambers and Eglese (1988) discuss the use of preview demand data that are gathered by sending out a preview catalogue (whichdoes not necessarily include a full product range) to a sample comprised of several thousand regular customers and offering themthe opportunity to order products at a discount before the season starts. They assume that an aggregate forecast for the full product range is given, and propose to forecast the demand for a product line by multiplying the aggregate forecast with the fraction of total preview demand for products in that product line. They further propose a second, slightly more sophisticated forecasting method,which takes into account that the ratio of total demand to preview demand ('the scaling factor') may not be the same for all  product lines. These methods are very suitable and, indeed, have been developed for an apparel mail order company.

Thomassey and Happiette (2007) propose a decision-support system based on neural networks, which automatically performs item sales forecasting. The system is designed to deal with many characteristics of the apparel market: large number of items, short lifetimes, substitution of most items with each new collection, long lead times, and in?uence of many external factors like the weather,promotions, fashion, and the economic environment. The proposed system is composed of three steps: obtain prototypes of demand behavior using a clustering procedure on historical demand data, (2) link these prototypes to descriptive criteria (e.g. price, lifespan or materials) using a probabilistic neural network, and (3) assign each new item to a prototype based on the item's descriptive criteria. Forecasts generated by the proposed model on a set of 285 new items from a French apparel distributor have a MAPE of 147%. So, accuracy is low despite the complexity of the method. For this reason, we decided not to include this method in our comparative study. The results in Section 5 will show that the simpler methods that we do consider are all more accurate (for our data set).


Related Discussions:- Priori forecasting

Merger, The Chocolate ice cream company and the vanilla ice cream company h...

The Chocolate ice cream company and the vanilla ice cream company have agreed to merge and form Fudge Swirl Consolidated.Both companies are exactly alike that are located in differ

Financial management, determine the pay \back period for the project.

determine the pay \back period for the project.

Analysis, Ask question #Minimum 100 words accepted FIN 610 Milestone One Gu...

Ask question #Minimum 100 words accepted FIN 610 Milestone One Guidelines and Rubric Overview: For this first milestone, which is due in Module Three, you will describe each of the

INTRODUCTION TO FINANCIAL MARKETS, DIFFERENTIATE BETWEEN ALLOCATIVE EFFICIE...

DIFFERENTIATE BETWEEN ALLOCATIVE EFFICIENCY AND PRICING EFFICIENCY

Calculate the net present value of the proposed venture, MOUNTAIN BLEND SPE...

MOUNTAIN BLEND SPECIALITY COFFEE CO Mountain Blend Speciality Coffee Co, a listed company, is the largest coffee wholesaler and roaster in Carvania. At present it is solely invo

Dividend Policy, How is data from the financial sites used to calculate div...

How is data from the financial sites used to calculate dividends.

Corporate finance assignment, From a Corporate Finance and Governance persp...

From a Corporate Finance and Governance perspective, the assignment is about answering three fundamental questions: 1. How much value does the organisation create/destroy today?

Expected npv and standard deviation of npv, 1. The managers of Merton Medic...

1. The managers of Merton Medical Clinic are analyzing a proposed project. The project's most likely NPV is $120,000, but, as evidenced by the following NPV distribution, there is

INVESTMENT DECISION, You are a ceo of a sotware firm that has limited acces...

You are a ceo of a sotware firm that has limited access to debt equity markets. The average return on last year projects is 28 % . and cost of capital is 12%. would npv pr Irr be

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