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Business forecasting is a fundamental input when we are planning and taking decisions in our company. The world and the economy are evolving and a big part of these changes are conducted for our planning decisions. Without business forecasts we cannot make adequate plans for the future.
Business forecasting is a fundamental input when we are planning and taking decisions in our company. The world and the economy are evolving and a big part of these changes are conducted for our planning decisions. Without business forecasts we cannot make adequate plans for the future.
Bussines forecasting is important to plan our resources, our production, our supply chains, and also our costs, revenues, and profits.
Bussines forecasting is important to plan our resources, our production, our supply chains, and also our costs, revenues, and profits.
Time series data
When we have time series data, the first thing we would do is to draw a time series plot or a line chart of the data.
Systematic Components
Systematic Components
Trend Component
Trend Component
Is when the data is moving upwards over time or downwards over time.
Seasonal component
Seasonal component
in our data is a regular periodicity between all the peaks and all the troughs.
Cyclical component
Cyclical component
The periodicity the gap between the peaks and the gap between the troughs is not regular time wise.
Level component
Level component
You will notice that even though the data fluctuates up and down, it seems to return to this horizontal line on average.
Non systematic components
Non systematic components
Random component: You look at this line shot, it's very hard to say that there's an overall trend in the data. There's no regular up down fluctuation, so there's no seasonal component, and it's even hard to pick an irregular, up down pattern. So there's no cyclical component, and it's very hard to draw a line through the middle and say that the data is reverting to this horizontal line over time.
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