Compare the forecasting methods, Corporate Finance

Assignment Help:

In this section, we will compare the ?ve forecasting methods using the case study data described in Section 4. Methods 1-3 will ?rst be compared for the full data set (assortment groups 1-3) and in their forecasting accuracy for Season 2 (based on Season 1) and Season 3 (based on Season 2). Then, for Assortment group 1 and Season 3, Methods 1-3 will also be compared to Methods 4 and 5 based on expert judgment.

We used three different performance measures of forecast accuracy: mean absolute percentage error (MAPE), mean absolute deviation (MAD) and mean percentage error (MPE). The comparative performance of the different methods was consistent over the three error measures, and hence we report the results for MAPE only. We remark that we did not consider the mean square error (MSE) because of its sensitivity to outliers.

We report overall results (per year) as well as for classes of SKUs that are based on the value of the preview demand P. The classes that we use are P =0, 0< P 6 2, 2 < P 6 5, 5 < P 6 10, P > 10. We use this classi?cation, since we expect that higher preview demands will imply more reliable statistical extrapolations of that demand, and will therefore in?uence the relative performance of the different methods, especially statistical (Methods 1-3) versus expert judgment (Methods 4-5). We remark that the overall results exclude SKUs with P = 0, i.e. report the average over all SKUs with positive preview demand. This is done because some of the methods will always result in a zero forecast for these SKUs, and their inclusion would therefore reduce the meaningfulness of the overall results.


Related Discussions:- Compare the forecasting methods

Consultancy Firm, You work for a major consultancy firms in corporate finan...

You work for a major consultancy firms in corporate finance. Your firm has been approached by one of its major clients to assist them in solving a problem that they have. You have

Fundamentals of Corporate Finance, What is the industry average price-earni...

What is the industry average price-earnings ratio? What is the price-earnings ratio for Ragan, Inc.? Is this the relationship you would expect between the two ratios?

Bond valuation, An investor buys a French government, 10-year bond, paying ...

An investor buys a French government, 10-year bond, paying annual coupon of 4.5%. Face value = 1000. The investor is unsure of his investment horizon and considers 5 horizons: 5, 6

Advance demand information versus expert judgment, Table gives the average ...

Table gives the average MAPE, again for all SKUs with positive preview demand together (overall) and also per preview demand class. We remark that despite of the large differences

What are the consequences of a budget deficit, Question 1: (i) How do ...

Question 1: (i) How do economists go about studying the economics of the public sector? Describe the four stages of analysis (ii) The level of government intervention dif

Pearson quiz and assignment, I would like to know if I can get some help co...

I would like to know if I can get some help completing my quiz for my finance class. The quiz consist of 10 questions

Participative budgeting, You are required to provide an essay or report of ...

You are required to provide an essay or report of approx 500 words or less (excluding attachments and references),  accompanied by relevant calculations, in MS Word orPDF format ac

Calculate each partys net borrowing cost, Question: A U.S company has a...

Question: A U.S company has a liability of € 10 million in fixed rate loans outstanding at 6%. A German company has a $15 million Floating Rate Note outstanding at LIBOR. The e

Explain foreign exchange market, Question: a) Using illustrative and ...

Question: a) Using illustrative and numerical examples, differentiate between arbitraging and speculation in the context of foreign exchange market. b) One year borrowing

? The effect of incorrect recognition of revenue on, A? The effect of incor...

A? The effect of incorrect recognition of revenue on financial reportssk question #Minimum 100 words accepted#

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd