Managerial Economics in a Global Economy 5 th
Managerial Economics in a Global Economy, 5 th Edition by Dominick Salvatore Chapter 5 Demand Forecasting Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Qualitative Forecasts • Survey Techniques – Planned Plant and Equipment Spending – Expected Sales and Inventory Changes – Consumers’ Expenditure Plans • Opinion Polls – Business Executives – Sales Force – Consumer Intentions Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Time-Series Analysis • Secular Trend – Long-Run Increase or Decrease in Data • Cyclical Fluctuations – Long-Run Cycles of Expansion and Contraction • Seasonal Variation – Regularly Occurring Fluctuations • Irregular or Random Influences Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Trend Projection • Linear Trend: St = S 0 + b t b = Growth per time period • Constant Growth Rate St = S 0 (1 + g)t g = Growth rate • Estimation of Growth Rate ln. St = ln. S 0 + t ln(1 + g) Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Seasonal Variation Ratio to Trend Method Actual Ratio = Trend Forecast Seasonal Average of Ratios for = Adjustment Each Seasonal Period Adjusted Forecast Prepared by Robert F. Brooker, Ph. D. Trend = Forecast Seasonal Adjustment Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Seasonal Variation Ratio to Trend Method: Example Calculation for Quarter 1 Trend Forecast for 1996. 1 = 11. 90 + (0. 394)(17) = 18. 60 Seasonally Adjusted Forecast for 1996. 1 = (18. 60)(0. 8869) = 16. 50 Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Moving Average Forecasts Forecast is the average of data from w periods prior to the forecast data point. Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Exponential Smoothing Forecasts Forecast is the weighted average of of the forecast and the actual value from the prior period. Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Root Mean Square Error Measures the Accuracy of a Forecasting Method Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Barometric Methods • • National Bureau of Economic Research Department of Commerce Leading Indicators Lagging Indicators Coincident Indicators Composite Index Diffusion Index Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Econometric Models Single Equation Model of the Demand For Cereal (Good X) Q X = a 0 + a 1 P X + a 2 Y + a 3 N + a 4 P S + a 5 P C + a 6 A + e QX = Quantity of X PS = Price of Muffins PX = Price of Good X PC = Price of Milk Y = Consumer Income A = Advertising N = Size of Population e = Random Error Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Econometric Models Multiple Equation Model of GNP Reduced Form Equation Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Input-Output Forecasting Three-Sector Input-Output Flow Table Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Input-Output Forecasting Direct Requirements Matrix Direct Requirements Prepared by Robert F. Brooker, Ph. D. = Input Requirements Column Total Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Input-Output Forecasting Total Requirements Matrix Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Input-Output Forecasting Total Requirements Matrix Final Total Demand Vector = Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
Input-Output Forecasting Revised Input-Output Flow Table Prepared by Robert F. Brooker, Ph. D. Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide
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