Journal of Computations & Modelling

Forecasting method under the introduction of a day of the week index to the daily shipping data of sanitary materials

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  • Abstract

    Correct sales forecasting is indispensable to industries. In industries, how to improve forecasting accuracy such as sales, shipping is an important issue. There are many researches made on this. In this paper, we propose a new method to improve forecasting accuracy and confirm them by the numerical example. Focusing that the equation of exponential smoothing method(ESM) is equivalent to (1,1) order ARMA model equation, a new method of estimation of smoothing constant in exponential smoothing method is proposed before by us which satisfies minimum variance of forecasting error. Generally, smoothing constant is selected arbitrarily. But in this paper, we utilize above stated theoretical solution. First, we make estimation of ARMA model parameter and then estimate smoothing constants, which is the theoretical solution. Combining the trend removing method with this method, we aim to improve forecasting accuracy. Furthermore, “a day of the week index” is newly introduced for the daily data and the forecasting is executed to the manufacturer’s data of sanitary materials. We have obtained good result. The effectiveness of this method should be examined in various cases.

    Mathematics Subject Classification: 62J10
    Keywords: Minimum Variance; Exponential Smoothing Method; Forecasting, Trend; Sanitary Materials