What are the weaknesses of standard forecasting techniques

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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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