Quiz 3: Exploring Data Patterns and Choosing a Forecasting Technique
Qualitative forecasting techniques: The qualitative forecasting technique depends on human judgment and examination of clients with the ranking scale which are subjective. In other words, prior data is not available. The qualitative forecasting techniques are listed below: • Executive opinions • Delphi technique • Sales force pooling • Consumes surveys Quantitative forecasting techniques: The above technique forecast the future data when past data is available. This method is based on the historical data. The quantitative forecasting techniques are listed below: • Naive methods • Moving average methods • Exponential smoothing average methods • Trend analysis • Decomposition of time series Differences between qualitative and quantitative forecasting techniques are tabulated below:
Time series: The data that are collected, recorded, or observed over successive increments of time is termed as time series. In other words, the time series is calculated over a time interval. That is, the data, which can be measured in year, week, month etc, is a time series data. Moreover, the time-series plot explains how the value of a variable has changed over time.
The components of the time series model are, • Trend component • Cyclical component • Irregular component • Seasonal component Trend component indicates the overall long term upward or downward pattern of tendency in the time series. The cyclical component shows the repeating up and down movements through all phases of the time series. Irregular component data do not follow the trend modified by the cyclic components and the data have only random fluctuations in the series. When the data have periodic fluctuations and that data are recorded monthly or quarterly, then the time series represents Seasonal component.