4. Naive Forecast Calculation


Naive Forecast Screencast.
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In this screencast I will show you how to implement the naive method onto a spreadsheet. And for most people that are forecasting demand, they will forecast using a spreadsheet whether it is Google Sheets, like this, Excel, or anything similar. The idea is that we can quickly implement formula
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onto the spreadsheet, and then we can do it over and over with very, very little additional work. What I have here is, 30 periods worth of demand that are here in column B, as you see this here.
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And the task will be to implement the Naive Forecast
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into column C by applying the Naive Forecast formula, and then we’re just going to copy it down. The Naive Forecast, just it was a refresher, we’re using the most recent period of demand to predict the next period. In this case, what we are saying we cannot start the forecast until the second period. We will have had some kind of history to go on. And I am going to say, since we just observed period one’s demand we’re going got set period two’s forecast equal to the demand of period one.
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And then I hit Enter, and here is my forecast. In period one we had demand of 20. That will be my forecast for period two.
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And then, to use it for the other periods it’s fairly simple because I just need to copy down this formula, and voilà. Now here we have the forecast.
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And as you see, it is exactly the same value as one period earlier.
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There’s not much to this.
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To visualize this, I would like to just graph this.
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We insert a chart.
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And we would like it to be a line chart. And that looks pretty good. We have our periods here, our demand, and here is our chart. I’ll move this over a little bit.
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Pretty good.
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Now what you see here is, the line is basically shifted one period to the right or one period later in time.
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One thing that bothers me though is I like my.
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Axis to go from zero all the way to a little bit over. It looks better and it gives you much more of a sense on the volatility.
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There you have it. Here is the Naive Forecast implemented into a spreadsheet.
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And we apply the formula, we copied it down, we charted it and this is what you get as a result.
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