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A time series is a sequence of observations of a time varying
quantity of interest. Examples are the monthly demand for a product,
the annual freshman enrollment in a department of the university
and the daily flows in a river. Time series are important for
operations research because they are often the drivers of operations
research decision models. An inventory model requires estimates
of future demands, a course scheduling and staffing model for
the university department requires estimates of future student
inflow, and a model for providing warnings to the population in
a river basin requires estimates of river flows for the immediate
future.
The forecasting add-in provides tools for selecting a model
that describes the time series, selecting a method for estimating
the parameters of the model and using the method to forecast
future values of the time series. Models assume that observations
vary according to some probability distribution about an underlying
function of time.
Four forecasting methods are provided by the add-in: moving
average, exponential smoothing, regression and exponential smoothing
with a trend (double exponential smoothing). The add-in builds
a form that accepts data from the user and provides functions
that compute estimates of the model parameters. The menu installed
by the forecasting add-in gives access to several options.
- Add Forecast: This allows the user to forecast one or more
time series using one of the four methods.
- Compare: This option analyzes a single time series with
more than one method.
- Simulate: This option simulates a time series using Monte
Carlo simulation so that the response of one or more forecasting
methods can be compared. The data changes in real time as
the simulation parameters are changed.
- Portfolio: This option may have a number of time series
representing the unit values of investments and the associated
number of units owned. The add-in computes the total value
of the portfolio and forecasts of the portfolio value.
- Change: This option provides the means to change an existing
forecast.
- Relink: When a model is prepared on one computer and opened
on another, the add-in functions will not work. The relink
command rewrites the functions to link with the current computer.
This option must be chosen to manipulate the demonstation
workbook.
- About Add-in: This option displays the author and date of
the installed version of the add-in. New versions are placed
on this web site in the Excel add-in section as new features
are added and errors are corrected.
Click a link at the left to see pages describing the several
options. |