8/8/2019 08x02 Seasonally-Adjusted Forecasts

1/14

Time-Series ForecastingUsing Microsoft Excel

Henry C. Co

Technology and Operations Management,

California Polytechnic and State University

Part 2. Seasonality-AdjustedForecasts

8/8/2019 08x02 Seasonally-Adjusted Forecasts

2/14

Demand Forecasting (Henry C. Co)

2

After completing the trendline inColumn E, lets add a column ofmoving averages.

8/8/2019 08x02 Seasonally-Adjusted Forecasts

3/14

Step 1. Moving AverageMoving Average of 3 months

The center of the first 5-day moving average is the 3rd day i.e., cell D3 as

shown.

Demand Forecasting (Henry C. Co)

3

8/8/2019 08x02 Seasonally-Adjusted Forecasts

4/14

Demand Forecasting (Henry C. Co)

4

Copy the formula in cell F4, and

paste it all the way to the

Wednesday of Week 7.

Notice that we did not copy the

formula beyond D34. Why?

The formula for D34, which is

D34=AVERAGE(D32:D36) uses

the last available demand data.

Beyond this cell, we would be

using blank cell for the movingaverage, which is not meaningful.

8/8/2019 08x02 Seasonally-Adjusted Forecasts

5/14

Step 2. RatiosUse the demand data and the 5-period centered moving average to

determine the seasonal relatives.

Demand Forecasting (Henry C. Co)

5

8/8/2019 08x02 Seasonally-Adjusted Forecasts

6/14

Demand Forecasting (Henry C. Co)

6

Copy the formula in cell G4, and

paste it all the way to the

Wednesday of Week 7.

Notice that we stopped at cell

G34.

8/8/2019 08x02 Seasonally-Adjusted Forecasts

7/14

Step 3. Seasonal Relatives

Insert a column and label it "Seasonal Rel.Compute the seasonal relatives for :Wednesday by taking the average of all ratiocorresponding to Wednesdays Cell, i.e.,H4=AVERAGE(G4,G9,G14,G19,G24,G29,G34)

.

Thursday by taking the average of all ratio

corresponding to Thursday (Cell H5).

Friday by taking the average of all ratio corresponding toFriday (Cell H6).

Monday by taking the average of all ratio correspondingto Monday (cell H7).

Tuesday by taking the average of all ratio correspondingto Tuesday (Cell H8)

Demand Forecasting (Henry C. Co)

7

8/8/2019 08x02 Seasonally-Adjusted Forecasts

8/14

Demand Forecasting (Henry C. Co)

8

Insert a column and label it "Seasonal Rel.

Compute the seasonal relatives for :

Wednesday by taking the average of all ratio

corresponding to Wednesdays Cell, i.e.,

H4=AVERAGE(G4,G9,G14,G19,G24,G29,G34).

Thursday by taking the average of all ratio

corresponding to Thursday , i.e.,

H5=AVERAGE(G5,G10,G15,G20,G25,G30)

Friday by taking the average of all ratio

corresponding to Friday , i.e.,

H6=AVERAGE(G6,G11,G16,G21,G26,G31.

Monday by taking the average of all ratio

correspond1ing to Monday , i.e.,

H7=AVERAGE(G7,G12,G17,G22,G27,G32)

Tuesday by taking the average of all ratiocorresponding to Tuesday , i.e.,

H8=AVERAGE(G8,G13,G18,G23,G28,G33.

8/8/2019 08x02 Seasonally-Adjusted Forecasts

9/14

Demand Forecasting (Henry C. Co)

9

Click and drag to highlight the first 5 seasonal relatives.Then right-click and choose copy.

8/8/2019 08x02 Seasonally-Adjusted Forecasts

10/14

Demand Forecasting (Henry C. Co)

10

Use "Paste Special" to paste the VALUES downwards (next 5 days)

8/8/2019 08x02 Seasonally-Adjusted Forecasts

11/14

Demand Forecasting (Henry C. Co)

11

Repeat "Paste Special" to paste the VALUES, until you pass the last row

of data. (See next slide)

8/8/2019 08x02 Seasonally-Adjusted Forecasts

12/14

Demand Forecasting (Henry C. Co)

12

This is a screenshot showing the 5 seasonal relatives copied passed the last row of data.

8/8/2019 08x02 Seasonally-Adjusted Forecasts

13/14

Step 4. Adjusted ForecastedInsert a column and label it "ADJ Forecast"

The seasonally adjusted forecast = the value on the trendline * seasonal

relative.

Demand Forecasting (Henry C. Co)

13

8/8/2019 08x02 Seasonally-Adjusted Forecasts

14/14

Demand Forecasting (Henry C. Co)

14

Copy the formula and

paste all the end of week8.

You may have to decreasethe decimal places.

The forecast for week 8 isshown in column I, rows37-41.