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Forecasting Mini Cases

The client was a large manufacturing company that needed forecasts for hundreds of disposable tableware items each month. They were using 6 simple forecasting methods in their in-house software, but the forecasts were often inaccurate. The company asked us to improve the forecasting accuracy and modify the software. A large car fleet company wanted help forecasting vehicle resale values to improve profit control. Historical data was available but specialists resisted statistical models. An airline required forecasts of weekly passenger numbers by route and class. Historical data was provided but traffic was affected by holidays, events, campaigns and strikes. Independent variables could include these factors and dependent variables would be passenger numbers.

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199 views2 pages

Forecasting Mini Cases

The client was a large manufacturing company that needed forecasts for hundreds of disposable tableware items each month. They were using 6 simple forecasting methods in their in-house software, but the forecasts were often inaccurate. The company asked us to improve the forecasting accuracy and modify the software. A large car fleet company wanted help forecasting vehicle resale values to improve profit control. Historical data was available but specialists resisted statistical models. An airline required forecasts of weekly passenger numbers by route and class. Historical data was provided but traffic was affected by holidays, events, campaigns and strikes. Independent variables could include these factors and dependent variables would be passenger numbers.

Uploaded by

krithika1288
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Case 1

The client was a large company manufacturing disposable tableware such as


napkins and paper plates. They needed forecasts of each of hundreds of items
every month. The time series data showed a range of patterns, some with trends,
some seasonal, and some with neither. At the time, they were using their own
software, written in-house, but it often produced forecasts that did not seem
sensible. The methods that were being used were the following:

1. average of the last 12 months data;


2. average of the last 6 months data;
3. prediction from a straight line regression over the last 12 months;
4. prediction from a straight line regression over the last 6 months;
5. prediction obtained by a straight line through the last observation with slope
equal to the average slope of the lines connecting last year’s and this year’s
values;
6. prediction obtained by a straight line through the last observation with slope
equal to the average slope of the lines connecting last year’s and this year’s
values, where the average is taken only over the last 6 months.

They required us to tell them what was going wrong and to modify the software to
provide more accurate forecasts. The software was written in COBOL, making it
difficult to do any sophisticated numerical computation.

Case 2
A large car fleet company asked us to help them forecast vehicle re-sale values.
They purchase new vehicles, lease them out for three years, and then sell them.
Better forecasts of vehicle sales values would mean better control of profits;
understanding what affects resale values may allow leasing and sales policies to
be developed in order to maximise profits.

At the time, the resale values were being forecast by a group of specialists.
Unfortunately, they saw any statistical model as a threat to their jobs, and were
uncooperative in providing information. Nevertheless, the company provided a
large amount of data on previous vehicles and their eventual resale values.

Case 3
In this project, we needed to develop a model for forecasting weekly air passenger
traffic on major domestic routes for one of Australia’s leading airlines. The
company required forecasts of passenger numbers for each major domestic route
and for each class of passenger (economy class, business class and first class).
The company provided weekly traffic data from the previous six years.

Air passenger numbers are affected by school holidays, major sporting events,
advertising campaigns, competition behaviour, etc. School holidays often do not
coincide in different Australian cities, and sporting events sometimes move from
one city to another. During the period of the historical data, there was a major
pilots’ strike during which there was no traffic for several months. A new cut-price
airline also launched and folded. Towards the end of the historical data, the airline
had trialled a redistribution of some economy class seats to business class, and
some business class seats to first class. After several months, however, the seat
classifications reverted to the original distribution.

(1) For the above cases describe the five steps of forecasting in the context of this
project
(2) For cases 2 and 3 list the possible dependent variables and independent variables that may
be used in the forecasting model

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