Working with forecasts
Forecasts allow you to predict future values of time series historical data.
With forecasting capabilities, you can make projections of future values based on past values. Using forecasts, organizations can prepare for changes in economic or competitive conditions by analyzing time series historical data to predict performance and future trends. For example, in a supply chain, if the forecast demand matches the actual demand then significant efficiencies can be achieved in terms of production, distribution, and return.
QMF forecasts use various predictive methods based on mathematical algorithms that model the future demand based on time series historical data that can be sourced from queries and tables containing date or time columns. The overall objective is to choose a time series method that produces a best fit model of past values, by identifying existing patterns in the data and projecting the model into the future to generate the forecast.
- If the time series is relatively stationary with no overall tendency to fluctuate at one part of the series as compared to another part of the series, then Moving Average, Weighted Moving Average, or Single Exponential Smoothing provide the best fit model.
- If the time series has a trend with a consistent upward or downward movement over time, then Double Exponential Smoothing provide the best fit model.
- If the series has a trend and seasonality with a pattern of peaks and troughs that repeat themselves over a time-frame of usually less than or equal to a year, then Holt-Winters method provide the best fit model.
- If the series has a trend, seasonality and cyclicity with a pattern of peaks and troughs that repeat themselves over an extended time-frame usually greater than a year, then the Multiplicative Decomposition method provide the best fit model.
- If the series displays none of the aforementioned methods, then Neural Networks will be used to mathematically fit the historical data.
- If there are theoretical reasons to indicate that the data should follow a clear mathematical function, then one of the Curve fitting methods can be used.
- In addition to the aforementioned methods, the forecaster is also able to manually adjust any predicted values based on the forecaster's knowledge and any external events.