Sam Sugiyama has written a primer on the use of Monte Carlo Simulation to assess forecast error. His simple illustrative example and description of the steps in the MCS procedure provide a non-technical overview of this fascinating approach to the evaluation of uncertainty in forecasts. For...

Stephen Schnaars notes that the Kenneth Kahn book is one of the few books that steers a wide path around the most commonly-covered time series techniques, concentrating instead on 20 new-product forecasting techniques. While Schnaars finds that brevity of coverage and lack of empirical support...

Dan Williams illustrates the major statistical problems with seasonal indexes estimated from short time series. First it is difficult to distinguish the true seasonal index from the year-to-year random variation in the index. Second, the measured indexes are particularly sensitive to outliers in...

Chris Chatfield draws on his experience of over 40 years of forecasting to make some practical recommendations about the choice and implementation of forecasting methods and to offer advice to forecasting practitioners and consultants. Copyright International Institute of Forecasters, 2007

Authors Rob Hyndman and Andrey Kostenko discuss the bare minimum data requirements for fitting three common types of seasonal models: regression with seasonal dummies, exponential smoothing, and ARIMA. Achieving the requisite minimum numbers, however, does not ensure adequate estimates of...

Stephan Kolassa and Wolfgang Schütz provide a careful look at the ratio MAD/Mean, which has been proposed as a substitute metric for the MAPE in the case of intermittent demand series. They explain how MAD/Mean can be viewed as a weighted mean of absolute percentage errors and thus as a...

Peter responds to the three commentaries on his article entitled “Assessing the Cost of Forecast Error; A Practical Example.” (Published in Issue 7 of Foresight) The commentaries were made by Thomas R. Willemain, Michael E. Smith, and Scott Roy and published in the same edition of Foresight...

The Keys to the White House is a historically based model that has forecast well ahead of time the winners of every presidential election from 1984 through 2004. The theory behind the Keys is that presidential election results turn primarily on the performance of the party controlling the White...

Peter provides a detailed tutorial on the costs associated with forecast errors. His procedure considers inventory costs, including safety stock, as well as the costs of lost sales attributable to poor service (out-of stock). He shows how the cost of forecast error (CFE) can be used to determine...

Jim observes that the last seven years have seen significant changes in the forecasting software environment, both in terms of computing ability and variety of products. He refers to an article that he and Len Tashman wrote at the turn of the century and presents seven categories of criteria...