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

Calculate the price of maturity assuming, a)    Calculate the price of a Eu...

a)    Calculate the price of a European style call option with 6 months left to maturity assuming a risk-free rate of 3.5% and a non-dividend paying stock which can change in price

1.identify a limited liability company listed in the, Introduction to the c...

Introduction to the company and its business 2. From the information given in the financial statements, calculate the company’s operating and financial leverage. 3. Obtain the info

Forecasts based on advance demand information, The case company combines SK...

The case company combines SKUs into product groups and product groups into assortment groups. The methods based on advance demand information (Methods 1-3) can therefore be on a pr

Net present value, Based on its Net Present Value (NPV), should the followi...

Based on its Net Present Value (NPV), should the following project be accepted?  Please assume a discount rate of 10%.

Portfolio duration, how to calculate duration of a portfolio by using the a...

how to calculate duration of a portfolio by using the average maturity, average coupon rate and average yield of maturity?

Book value of equity, Book Value of Equity: This is the measure used by ow...

Book Value of Equity: This is the measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid

Replacement decision, Baobab rolling mills owns a lathe machine which was p...

Baobab rolling mills owns a lathe machine which was purchased 10years ago at sh. 75 million. The machine had an expected life of 15 yrs at the time it was purchased, and management

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

Define corporate governance, Problem : (a) Define corporate governance...

Problem : (a) Define corporate governance. (b) Discuss about the Advantages of Corporate Governance. (c) Anlayse the influence relationships among business, government

Stress testing related to risk management in banking, Question: "Banks ...

Question: "Banks have plenty of motives for developing risk-based practices and the risk models. In addition, regulators made this development a major priority for the banking

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