Chapter 3 Key Terms

 

Associative Model (68): Forecasting Technique that uses explanatory variables to predict future demand.

 

Bias (93): Persistent tendency for forecasts to be greater or less than the actual values of a time series.

 

Centered Moving Average (83): A moving average positioned at the center of the data that were used to compute it.

 

Control Chart (92): A visual tool for monitoring forecast errors.

 

Correlation (88): A measure of the strength and direction of the relationship between two variables.

 

Cycle (70): Wavelike variations lasting more than one year.

 

Delphi Method (69): Managers and staff complete a series of questionnaires, each developed from the previous one, to achieve a consensus forecast.

 

Error (90): Difference between the actual value and the value that was predicted for a given period.

 

Exponential Smoothing (75): Weighted averaging method based on forecast plus a percentage of the forecast error.

 

Forecast (65):  statement about the future value of a variable of interest.

 

Irregular Variation (70): Caused by unusual circumstances not reflective of typical behavior.

 

Judgmental Forecast (68): Forecasts that use subjective inputs such as opinions from consumer surveys, sales staff, managers, executives, and exports.

 

Least Squares Line (85): Minimizes the sum of the squared vertical deviations around the line.

 

Linear Trend Equation (77): Ft = a + bt, used to develop forecasts when trend is present.

 

Mean Absolute Deviation (MAD) (90): the average absolute forecast error.

 

Mean Absolute Percent Error (MAPE) (90): the average of squared forecast errors.

 

Mean Squared Error (MSE) (90): The average absolute percent error.

 

Moving Average (72): Technique that averages a number of recent actual values, updated as new values become available.

 

Naïve Forecast: The forecast of any period equals the previous period’s actual value.

 

Predictor Variables (85): variables that can be used to predict values of the variable of interest.

 

Random Variations (70): Residual variations after all other behaviors are accounted for.

 

Regression (85): Technique for fitting a line to a set of points.

 

Seasonal Relative (82): Percentage of average or trend.

 

Seasonal Variations (81): Regular repeating movements in series values can be tied to recurring events.

 

Seasonality (70): Short term regular variations related to the calendar or time of day.

 

Time Series (70): A time-ordered sequence of observations taken at regular intervals.

 

Time Series Forecasts (68): Forecasts that project patterns identified n recent time-series observations.

 

Tracking Signal (93): The ratio of cumulative forecast error to the corresponding value of MAD, used to monitor a forecast.

 

Trend (70): a long term upward or downward movement in data.

 

Trend-Adjusted Exponential Smoothing (80): Variations of exponential smoothing used when a time series exhibits trend.

 

Weighted Average (74): More recent values in a series are given more weight in computing a forecast.