![]() JDA Demand Management, which is JDA’s forecasting application, uses the latter and more straightforward terminology of Base, Trend, and Seasonality instead of Alfa Beta Gamma. What the Outcome of the Misnaming Has CausedĪll of this leads to widespread confusion that would be resolved if they had been called something meaningful like “Base Factor,” “Trend Factor,” and “Seasonality Factor.”Īlas, we’re stuck with the first names given, and forecasting tools continue to use them with two notable exceptions. Adding to the confusion, dictionaries generally do not bring up the forecasting definitions of any of these terms, as they are niche. This is because Gamma’s definitions are historically in nuclear science or stellar cartography. If we take the gamma example, it isn’t easy to see why it was chosen to represent the seasonal factor. This, in our view, was done for academic reasons rather than being given a more descriptive appellation. It doesn’t help that these parameters were named nonsensically with jargon labels. However, a much smaller subset can actually tell you what they mean. Despite this, many people who have worked in statistical forecasting can list off these parameters. ![]() We are fortunate that, in the information age, the most common statistical parameters have been well defined online. Time-Based Forecast Parameters: Seasonal Periods, Period Indicator, Forecast Horizon, Historical Periodsįor this article, we will only focus on the core forecast parameters. ![]() Secondary (to the Core) Forecast Parameters: Alfa 2, Alfa End, Alfa Increment, Sigma, Trend Dampening.Core Forecast Parameters: Alfa Beta Gamma.To organize the discussion, I have broken the possible parameters into three categories that will be explained in this chapter. Some are common to every forecasting tool, and others are less commonly used or are only used in specific types of forecasts. There are different categories of forecast parameters. A parameter is defined as follows: A numerical or other measurable factor forming one of a set that defines a system or sets its operation conditions. These forecast methods require parameters to provide the desired forecasting output. The forecast methods can be considered the starting point for creating a statistical forecast. Trend Model and Test for Seasonal Pattern.Forecast with Automatic Model Selection.Holt and Winters’ Exponential Smoothing.Constant Model with Auto Alpha Adaptation.As an example, here is the list of methods that ship with SAP DP. Forecasting ModelsĮvery statistical forecasting application ships with a series of standard forecasting methods. Every statistical forecasting application ships with a series of standard forecasting models.
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