# Forecasting Qualitative Methods

Overview Forecasting Qualitative Methods
Assoc. Prof. Christian Tanushev, Ph.D. 12 October 2011
• Quantitative forecasting methods – review • Typology of forecasts • Qualitative forecasting methods
– – – – – – – – Brainstorming Prediction markets Estimate – talk – estimate (Group communication) Delphi Structured analogy Game theory Role playing Conjoint analysis

• Forecasting and decision making process
– Club of Rome’s Forecast. “The Limits to Growth.” 1972 – National Intelligence Council. “Global Trends 2025. A Transformed World.”

• Summary
2

Forecasting Definitions
• Forecasting is the process of estimation in unknown situations • A forecast is a prediction based on knowledge of past behavior • Requirements for a forecast
– Validity – Variability – Valuation of probability

Good forecasting is based on science, art, and luck
• Forecasting is both a science and an art
– Science
• forecasting equations • statistics/regression analysis

– Art
• good at guessing (judgmental forecasting) • good at picking the correct type of forecasting equation

• We forecast phenomena and processes which we are unable to control
3

4

Forecasting Basic Steps
“The forecast”

Time Series Models
• Extrapolation of historical data into the future • Plotted on graph and analysed for four basic components of variation
– – – – – – – – – –
5

Step 6 Monitor the forecast Step 5 Prepare the forecast Step 4 Gather and analyze data Step 3 Select a forecasting technique Step 2 Establish a time horizon Step 1 Determine purpose of forecast

Trend - long-term movement in data Seasonality - short-term regular variations in data Cycle – wavelike variations of more than one year’s duration Irregular variations - caused by unusual circumstances Random variations - caused by chance Simple weighted average, median, mode Simple moving average, double moving average Exponential smoothing Linear regression Multiplicative model
6

• Examples

• Used where good...