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    Multivariate Forecasting in Tableau With R - R-Bloggers

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    Multivariate Forecasting in Tableau With R - R-Bloggers

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    195 views15 pages

    Multivariate Forecasting in Tableau With R - R-Bloggers

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    malli karjun
    tableau and r

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    Multivariate Forecasting in
    Tableau with R
    August 2, 2016
    By Bora Beran

    Like 0 Share Share

    (This article was first published on R Bora Beran, and kindly contributed to R-bloggers)

    Share Tweet

    Since version 8.0 it is very easy to generate forecasts in Tableau using


    exponential smoothing. But in some cases you may want to enrich
    your forecasts with external variables. For example you may have the
    governments forecast for population growth, your own hiring plans,
    upcoming holidays*, planned marketing activities which could all
    have varying levels of impact on your forecasts. Or sometimes you
    may just want to simulate different scenarios and ask what if
    questions e.g. what would my sales look like if I hired 10 more sales
    representatives? If interest rates went up by X percent, how would that
    impact my profits?

    Lets see how we can tackle both uses cases with the help of
    Autoregressive Integrated Moving Average with eXogenous variables
    (ARIMAX) models in Rs forecast package.
    *In some cases seasonality may be sufficient to capture weekly cycles but not for
    moving events like Easter, Chinese New Year, Ramadan, Thanksgiving, Labor day etc.

    Handling special events

    In the image below the observed/historical demand is shown in blue.


    At the bottom you can see the holidays as green bars with height of 1
    and non-holidays as bars of height 0. This representation is often
    referred to as dummy encoding.

    Our data contains 2 holidays that happened in the past and 1 upcoming
    holiday. One can clearly see that the holidays are causing noticeable
    spikes in demand. For a store owner who doesnt want to miss the next
    holiday opportunity by running out of stock early, it is very valuable to
    incorporate this important piece of information in the demand forecast.

    The formula for the forecast shown with the red line (which doesnt
    take holidays into account) looks like the following:

    SCRIPT_REAL("library(forecast);
    append(.arg1[1:99],forecast(ts(.arg1[1:99], frequency=12), h=21)$mean)",

    First 99 points cover the historical data while last 21 are whats being
    predicted. The data follows a 12 period cycle. Second line of R code
    appends the predicted values to the reported values to generate the full
    series.
    The formula for the forecast shown with the green line (which
    incorporates the holidays) looks like the following:

    SCRIPT_REAL("library(forecast);
    data <- data.frame(demand=.arg1,holiday=.arg2);
    training <-data[1:99,];
    model<-auto.arima(training[,1],xreg=training[,2]);
    append(training[,1],forecast(model,xreg=.arg2[100:120])$mean)",

    In this script, exogenous regressors are passed to the function using the
    xreg argument. It can be clearly seen that both the spike due to holiday
    and the regular seasonality in demand are represented by this model. If
    there are multiple events with potentially different effects (positive vs.
    negative, different magnitudes etc.), they can be handled using the
    same method if added as separate variables.

    What-If Analysis

    Now that we covered handling events as additional regressors, lets


    talk about we can apply the same methodologies to do what if analysis.

    Below you can see three time series; Sales and 2 economic indicators.
    Assume that the two indicators contain the current best estimates of
    behavior for next few days but Sales for the same period is unknown
    however can be estimated using the two economic indicators.
    What makes this visualization more interesting is that you can also
    adjust the value of economic indicators and the time frame these
    overrides apply. For example in the image below, indicator X has been
    increased by 15 units (dark blue peak) for the period April 13th and
    April 25th while indicatory Y has been reduced by 20 units (dark
    orange dip) for the period April 20th and May 1st. The impact can be
    clearly seen in the dark green portion of the line in the first chart. By
    adjusting the parameters in the dashboard one can perform what-if
    analysis and understand impact of likely future events, best/worst case
    scenarios etc.

    What if analysis with time series forecasting

    Lets take a look at the R script that is used to create this view.

    SCRIPT_REAL("library(forecast);
    training <- ts(data.frame(sales=.arg1,indX=.arg2,indY=.arg3)[1:100,],frequency=7);
    model<-auto.arima(training[,1],xreg=training[,-1]);
    whatifdata <- data.frame(indX=.arg2,indY=.arg3)[101:120,];
    whatifdata <- data.frame(indX=.arg2,indY=.arg3)[101:120,];
    append(training[,1],forecast(model,xreg=whatifdata)$mean)",
    AVG([Sales]),AVG([Economic Indicator X]),AVG([Economic Indicator Y]))

    As you can see, the formula is very similar to earlier examples. In this
    demo dataset, the first 100 rows are used for model fitting while the
    last 20 contain the sales forecast as well as the inputs for the sales
    forecast that are the what-if values defined in Economic indicator X
    and Y fields as a function of parameter entries.

    You can find all of these examples in the Tableau workbook published
    HERE.

    In the sample workbook, I also provided a sheet that compares the


    ARIMAX result to multiple linear regression to give a better sense of
    what youre getting out of applying this particular method.

    Related

    How To Forecast smooth package for


    With Tableau And R R. es() function. Part I
    How To Forecast With Good news, everyone!
    Tableau And R smooth package is
    July 1, 2015 now available on Forecasting:
    In "R bloggers" CRAN. And it is time to Exponential Smoothing
    look into what this Exercises (Part-3)
    package 14,
    October can 2016
    do and April 17, 2017
    In "R bloggers" In "R bloggers"

    Share Tweet

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