Week 6 Lecture 4 Forecasting Flashcards Preview

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Flashcards in Week 6 Lecture 4 Forecasting Deck (10)
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1
Q

When should the ‘Holt-Winters’ method be used?

A

When data is trended and seasonal.

2
Q

What are 4 advantages fo exponential smoothing?

A
  • Plausible Assumptions
  • Easy to compute (for a computer)
  • Can be used by staff with limited mathematical background
  • Exponential smoothing work well in practise
3
Q

What are 2 disadvantages of exponential smoothing?

A
  • Difficult to find a starting point

- Exponential smoothing lags behind the actual trend as a result of smoothing.

4
Q

How do we calculate the starting point when using the holt-winters method?

A

Calculate an average of the first 2 or 3 points

5
Q

What are the 3 methods of calculating the accuracy of forecasting methods?

A
  • Mean absolute deviation.
  • Mean Square Error.
  • Mean Absolute Percentage Error.
6
Q

What are the characteristics of ‘Mean Absolute deviation’? And how is it calculated?

A
  • Considers the absolute value of errors
  • Gives equal weighting to each error.

Sum of errors/ N

7
Q

What are the characteristics of ‘Mean Square Error’? And how is it calculated?

A
  • Mean Square Error penalises larger errors so as to not throw off the average.
  • If a system has a large anomaly error the Mean Square Error should be used

error (squared) + error (squared) / N

8
Q

What are the characteristics of “Mean Absolute Percentage Error’? And how is it calculated?

A
  • This method gives an average percentage error for each individual error.

Sum of Percentage errors / N

9
Q

What is the error equal to?

A

Actual - Forecast

10
Q

When dealing with negatives in accuracy checking methods,how are they recorded?

A

They’re recorded as positive numbers