# Tag Archives: how to?

## Can neural networks predict trended time series?

Yes and… no! First, I should say that I am thinking of the common types of neural networks that are comprised by neurons that use some type of sigmoid transfer function, although the arguments discussed here are applicable to other types of neural networks. Before answering the question, let us first quickly summarise how typical… Read More »

## The difference between in-sample fit and forecast performance

One of the fundamental differences in conventional model building, for example they way textbooks introduce regression modelling, and forecasting is how the in-sample fit statistics are used. In forecasting our focus is not a good description of the past, but a (hopefully) good prediction of the yet unseen values. One does not necessarily imply the… Read More »

## ABC-XYZ analysis for forecasting

The ABC-XYZ analysis is a very popular tool in supply chain management. It is based on the Pareto principle, i.e. the expectation that the minority of cases has a disproportional impact to the whole. This is often referred to as the 80/20 rule, with the classical example that the 80% of the wealth is owned… Read More »

## How to choose a forecast for your time series

Choosing the most appropriate forecasting method for your time series is not a trivial task and even though there has been scientific forecasting for so many decades, how to best do it is still an open research question. Nonetheless, there are some reasonable ways to deal with the problem, which although they may not be… Read More »

## A fundamental idea in extrapolative forecasting

Extrapolative forecasting, using models such as exponential smoothing, is arguably not very complicated from a mathematical point of view, but it requires a shift in logic in terms of what is a good forecast. For this discussion I will use a simple form of exponential smoothing to demontrate my point. 1. The forecasting model: single… Read More »

## Holt Winters method example

From time to time people have asked me how to implement Holt Winters (trend-seasonal exponential smoothing) in Excel. I have my reservations for using Excel to do your day-to-day forecasting. Nonetheless, you can find an example here.