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    Forecasting Methods and Applications

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    Marcel Maia
    The document summarizes a chapter from a book on forecasting methods. It discusses different forecasting techniques such as exponential smoothing, regression analysis, and Box-Jenkins methods. It also evaluates a table in the book that can help managers select the most appropriate forecasting technique based on factors like time horizon, data pattern, costs, and accuracy.

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    Forecasting Methods and Applications

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    Marcel Maia
    10 views4 pages
    The document summarizes a chapter from a book on forecasting methods. It discusses different forecasting techniques such as exponential smoothing, regression analysis, and Box-Jenkins methods. It also evaluates a table in the book that can help managers select the most appropriate forecasting technique based on factors like time horizon, data pattern, costs, and accuracy.

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    The document summarizes a chapter from a book on forecasting methods. It discusses different forecasting techniques such as exponential smoothing, regression analysis, and Box-Jenkins methods. It also evaluates a table in the book that can help managers select the most appropriate forecasting technique based on factors like time horizon, data pattern, costs, and accuracy.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    10 views4 pages

    Forecasting Methods and Applications

    Uploaded by

    Marcel Maia
    The document summarizes a chapter from a book on forecasting methods. It discusses different forecasting techniques such as exponential smoothing, regression analysis, and Box-Jenkins methods. It also evaluates a table in the book that can help managers select the most appropriate forecasting technique based on factors like time horizon, data pattern, costs, and accuracy.

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    © All Rights Reserved
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    See discussions, stats, and author profiles for this publication at: https://www.researchgate.

    net/publication/222105795

    Forecasting: Methods and Applications

    Chapter in Journal of the American Statistical Association · January 1998


    DOI: 10.2307/2287014

    CITATIONS READS

    1,290 733

    3 authors, including:

    Spyros Makridakis Rob J Hyndman


    Neapolis University Monash University (Australia)
    153 PUBLICATIONS 7,442 CITATIONS 232 PUBLICATIONS 9,521 CITATIONS

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    All content following this page was uploaded by Spyros Makridakis on 06 January 2015.

    The user has requested enhancement of the downloaded file. All in-text references underlined in blue are added to the original document
    and are linked to publications on ResearchGate, letting you access and read them immediately.
    Forecasting Methods for Managers by S. Makridakis; S. Wheelwright
    Review by: J. A. C. C. Watson-Gandy
    Operational Research Quarterly (1970-1977), Vol. 25, No. 4 (Dec., 1974), pp. 648-649
    Published by: Palgrave Macmillan Journals on behalf of the Operational Research Society
    Stable URL: http://www.jstor.org/stable/3008101 .
    Accessed: 05/01/2015 13:41

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    This content downloaded from 194.221.86.126 on Mon, 5 Jan 2015 13:41:25 PM


    All use subject to JSTOR Terms and Conditions
    OperationalResearch Quarterly Vol. 25 No. 4
    tendency to head for complexity in tackling a problem", "do a little of every-
    thing and do it at the start" and "the final selection from alternative solutions
    must be manual".
    One would not agree with all his points: two that the reviewer objected to
    were "an unimplemented solution is a poor solution" and the statement
    " 'The Limits of Growth' did not predict" (!) The author is rather sententious,
    very much overworks the word "wise" and has also not been well served by
    his publisher. A price of ?4 for a book of poor visual appeal and 160 pages
    with only six diagrams is excessive. However, despite these drawbacks, it is
    worth buying if only to check periodically one's own group's behaviour.
    B. K. CHESTERTON

    Forecasting Methods for Managers.


    and S. WHEELWRIGHT.
    S. MAKRIDAKIS
    Wiley-Interscience,New York, 1973, 238 pp. ?700.
    The forecasting techniques available have increased both in number and com-
    plexity, so now is the time for a book to help both OR workers and managers
    to choose the most appropriate technique. Spyros Makridakis and Steven
    Wheelwright attempt to fill this gap with their book, Forecasting Methods
    for Managers. It is principally aimed at managers, therefore you would expect a
    simple approach to the techniques.
    They introduce forecasting gently in the first two chapters by discussing the
    role of forecasting in a firm, stressing, quite rightly, that accuracy is not
    the sole criterion. They do not mention, however, that a graph can provide the
    manager with useful information.
    They then proceed to develop all the techniques, but in most cases they
    cannot describe them sufficiently. The smoothing techniques, regression
    techniques and adaptive filtering, (they prefer the latter), however, are well
    described via worked examples. They give a basic introduction to Box-Jenkins,
    but for most of the techniques the "manager" must look up the references
    provided. Since the book is intended for the U.S.A. it refers to techniques
    which are not commonly known in the U.K. (e.g. CENCUS I and FORAN),
    but there is no mention of Holt-Winters, Harrison or Trigg. For a comparison
    of Box-Jenkins, Brown, Holt-Winters and Harrison, see Dr. Reid.'
    The book's most important aspect is provided in Chapter 12, which contains
    a table to help the manager select the most appropriate forecasting technique,
    using six basic criteria. These are: (1) time horizon, (2) pattern of data (e.g.
    horizontal auto- or non-correlated), (3) type of model (time series, causal,
    statistical, non-statistical or mixed), and subjective measures on (4) costs,
    (5) accuracy and (6) applicability. The applicability is divided into (a) the time
    required to make a forecast and (b) the easiness to understand and interpret
    the results. The forecasting techniques are listed across the top.
    648

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    Book Selection
    The table is designed to be used in conjunction with the book. For example,
    if the manager has a short-term forecast to prepare he would look up in the
    table and find that the quickest method to prepare a forecast is simple
    exponential smoothing. Under exponential smoothing he will find a worked
    example explaining how to use this technique or references to explore further.
    However, only 70 per cent of the forecasting techniques in the table actually
    appear in the index under the same name. This will provide some confusion!
    In comparison with another table it is much more detailed than that produced
    by Chambers et al.2 but the latter has the advantage that it can be used on its
    own as each technique is described with references.
    One aspect seemed curious. If the manager knew he had an immediate term,
    non-correlated, horizontal pattern of data, the book advises the use of Inventory
    Control or Mathematical Programming. Mathematical Programming is not
    mentioned in the index and the one page headed "Inventory Control Theory"
    exhorts the reader to look elsewhere. It also contains the sentence, "Inventory
    Control shifts the burden ... from forecasting to inventory manipulation, which
    in many cases is a more practical way to deal with the problem". It could be
    phrased better.
    I find the book falls between two stools. It is too advanced for general
    management and yet not advanced enough for OR. I would advise people
    beginning forecasting to read the book because it is readable and enjoyable
    and discusses the practical aspects and uses of forecasting, rather than the
    individual techniques. At ?7, however, it is too expensive to buy.
    J. A. C. C. WATSON-GANDY
    REFERENCES
    Dr. D. J. REID (1971) A comparison of forecasting techniques on economic time series.
    Proceedings of the Joint Conference "Forecasting in Action" (M. J. BRAMSON, I. G. HELPS
    and J. A. C. C. WATSON-GANDY,Eds.), published by the O.R. Society and Long Range
    Planning Society.
    2 JOHNC. CHAMBERS, SATINDER K. MULLICKand DONALD D. SMITH(1971) How to choose
    the right forecasting technique. Harv. Bus. Rev. July/August, pp. 45-74.

    A Guide to Probability Theory and Application.


    C. DERMAN,L. J. GLESERand I. OLKIN.
    Holt, Rinehart & Winston,New York, etc. 1973. xvi + 750 pp. No price given.
    The authors, who are nationally and internationally well-respected statisticians
    and teachers, aim to provide an extensive treatment at an elementary level with
    specific attention to the needs and interests of researchersin social and environ-
    mental sciences and professionals in law, medicine and business. The intent is
    a presentation with a minimum of mathematics and a maximum of examples.
    In broad terms, both the aim and the intent have been achieved with a
    distinction of drafting that one would expect from authors of considerable
    649

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