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How to Improve Your Forecasts by
Modeling the Impact of Promotions
Business Interruptions and Events
Presented byEric StellwagenVice President & CofounderBusiness Forecast Systems, [email protected]
Business Forecast Systems,68 Leonard StreetBelmont, MA 02478 USA(617) 484-5050www.forecastpro.com
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Eric Stellwagen
Vice President, & Cofounder ofBusiness Forecast Systems, Inc.
Coauthor of Forecast Pro product line.
Over 28 years in forecasting.Currently serving on the board of directors of the InternationalInstitute of Forecasters and on the practitioner advisory board ofForesight: The International Journal of Applied Forecasting.
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What Well Cover
IntroductionsEvolution of Forecasting Process
What are Events?
Forecasting Event-Driven Data
Examples
Summary
Q&A
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2013, Business Forecast Systems, Inc. www.forecastpro.com
Evolution of Forecasting Proces
Customized
Approaches
Automatic Time
Series Approaches
Judgment &
Spreadsheets
Phase 1 Phase 2 Phase 3
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Customized Forecasting Metho
Customized approaches can take many fo
including:
Event-index models
Hierarchical approaches (e.g., top-down or other allocation schDynamic regression
New product models
etc.
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Common Events
Product promotionsMoveable holidays (e.g., Easter, Rosh Hashan
Ramadan)
Catastrophes (e.g., earthquakes, hurricanes, 9Labor strikes
Acquisitions
New legislation or regulations
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Forecasting Event-Driven Da
Judgmentally adjust history to remove impa
Separate base demand from event-driven
demand.
Use a time series extension model (e.g.,
event-index model, ARIMA intervention mode
etc.).
Use a multivariate model (e.g., regression)
8/13/2019 Forecast Pro Event Models
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What is an Event-Index Mod
An extension of exponential smoothing.
An index-based approach.
The model introduces an additional smooth
weight and updating equation.
The model requires an event schedule.
8/13/2019 Forecast Pro Event Models
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Event Schedule
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Building an Event-Index Mod
You need to decide how many event types
needed.
Each event type needs to have occurred
historically.
The schedule needs to include both the his
and forecast periods.
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Examples
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2013, Business Forecast Systems, Inc. www.forecastpro.com
Weekly Data
Weekly data presents many challenges
52 or 53 weeks per year
More moveable holidays
Lack of continuity between periods from year to
year
Event-index models can be very useful whe
forecasting weekly data
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2013, Business Forecast Systems, Inc. www.forecastpro.com
Conclusions
Time series methods do not perform well in thepresence of events.
An event-index model is an effective technique for
forecasting event-driven data.
The strengths of event-index models are accuracyease of application and adaptivity to changing
dynamics.
Event-index models are particularly useful when
forecasting weekly data.
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Forecast Pro
Examples from todays Webinar used Forecast Pro.To learn more about Forecast Pro:
Request a live WebEx demo for your team (submit
your request as a question right now)
Visit www.forecastpro.com
Call us at 617-484-5050
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2013, Business Forecast Systems, Inc. www.forecastpro.com
Forecast Training and Workshops
S
BFS offers forecasting webinars and product training
workshops.
On-site, and remote-based (via WebEx) classes are
available.
Learn more at www.forecastpro.com
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2013, Business Forecast Systems, Inc. www.forecastpro.com
Our Next Webinar
Identifying Problems in Your Data and Forecasts,October 24, 2013 1:30 p.m. EDT
James Berry, Senior Consultant, Business Forecast Systems
Learn how to improve your forecasting using outlier
detection, exception reporting and ABC categorization (Paretanalysis).
Visit www.forecastpro.comto sign up!
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2013, Business Forecast Systems, Inc. www.forecastpro.com
Questions?
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Thank you for attending