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Sem 5 Prep
← OperationsForecasting: what and why

Formulas for this chapter

Naive forecast

F(t) = A(t-1)

As a zero-cost benchmark, and when the series has no trend or seasonality worth modelling. Every other method must beat it to justify itself.

F(t)
Forecast for period t
A(t-1)
Actual demand in the most recent period

Forecast error

Error = Actual - Forecast

Step 6 of the process, every period. Keep the sign in the table; drop it only when computing absolute measures.

Actual
Demand that actually occurred in the period
Forecast
What was predicted for that period, before it happened
Step 5 of 23
Quick checkTheory

A planner cannot forecast individual shirt sizes reliably but forecasts total shirt demand well. Which feature explains this?

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