What are the weaknesses of standard forecasting techniques

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Reference no: EM131353336

CEO John Good ale, at Southern Illinois Power and Light, has been collecting data on demand for electric power in its western sub region for only the past 2 years. Those data are shown in the table below. To plan for expansion and to arrange to borrow power from neighboring utilities during peak periods, Good ale needs to be able to forecast demand for each month next year. However, the standard forecasting models discussed in this chapter will not fit the data observed for the 2 years.

a) What are the weaknesses of the standard forecasting techniques as applied to this set of data?

b) Because known models are not appropriate here, propose your own approach to forecasting. Although there is no perfect solution to tackling data such as these (in other words, there are no 100% right or wrong answers), justify your model.

c) Forecast demand for each month next year using the model you propose.

DEMAND IN MEGAWATTS
MONTH	LAST YEAR	THIS YEAR
January	5	17
February	6	14
March	10	20
April	13	23
May	18	30
June	15	38
July	23	44
August	26	41
September	21	33
October	15	23
November	12	26
December	14	17

Reference no: EM131353336

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