Managerial Economics in a Global Economy Chapter 5
Managerial Economics in a Global Economy Chapter 5 Demand Forecasting Power. Point Slides by Robert F. Brooker Copyright (c) 2001 by Harcourt, Inc. All rights reserved.
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 Power. Point Slides by Robert F. Brooker Copyright (c) 2001 by Harcourt, Inc. All rights reserved.
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 Power. Point Slides by Robert F. Brooker Copyright (c) 2001 by Harcourt, Inc. All rights reserved.
Power. Point Slides by Robert F. Brooker Copyright (c) 2001 by Harcourt, Inc. All rights reserved.
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) Power. Point Slides by Robert F. Brooker Copyright (c) 2001 by Harcourt, Inc. All rights reserved.
Seasonal Variation Ratio to Trend Method Actual Ratio = Trend Forecast Seasonal Average of Ratios for = Adjustment Each Seasonal Period Adjusted Forecast Trend = Forecast Power. Point Slides by Robert F. Brooker Seasonal Adjustment Copyright (c) 2001 by Harcourt, Inc. All rights reserved.
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 Power. Point Slides by Robert F. Brooker Copyright (c) 2001 by Harcourt, Inc. All rights reserved.
Moving Average Forecasts Forecast is the average of data from w periods prior to the forecast data point. Power. Point Slides by Robert F. Brooker Copyright (c) 2001 by Harcourt, Inc. All rights reserved.
Exponential Smoothing Forecasts Forecast is the weighted average of of the forecast and the actual value from the prior period. Power. Point Slides by Robert F. Brooker Copyright (c) 2001 by Harcourt, Inc. All rights reserved.
Root Mean Square Error Measures the Accuracy of a Forecasting Method Power. Point Slides by Robert F. Brooker Copyright (c) 2001 by Harcourt, Inc. All rights reserved.
Barometric Methods • • National Bureau of Economic Research Department of Commerce Leading Indicators Lagging Indicators Coincident Indicators Composite Index Diffusion Index Power. Point Slides by Robert F. Brooker Copyright (c) 2001 by Harcourt, Inc. All rights reserved.
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 Power. Point Slides by Robert F. Brooker Copyright (c) 2001 by Harcourt, Inc. All rights reserved.
Econometric Models Multiple Equation Model of GNP Reduced Form Equation Power. Point Slides by Robert F. Brooker Copyright (c) 2001 by Harcourt, Inc. All rights reserved.
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