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FORECASTING
Forecasting is the process of making statements about events which have not yet been observed. A commonplace example might be estimation for some variable of interest at some specified future date. Prediction is a similar, but more general term. Both might refer to formal statistical methods employing time series, cross-sectional or longitudinal data, or alternatively to less formal judgemental methods. The type of forecasting method depends on time frame, demand behavior, and cause of behavior.
Wal-Mart introduced a data warehousing model so it would have information for a specific store at a specific time period. The system is built to grow when the firm needs it to grow. A data warehouse (DW) is a database used for reporting. The data is offloaded from the operational systems for reporting. The data may pass through an operational data store for additional operations before it is used in the DW for reporting.
A data warehouse maintains its functions in three layers: staging, integration, and access. Staging is used to store raw data for use by developers (analysis and support). The integration layer is used to integrate data and to have a level of abstraction from users. The access layer is for getting data out for users.
A data warehouse provides a common data model for all data of interest regardless of the data's source. This makes it easier to report and analyze information than it would be if multiple data models were used to retrieve information such as sales invoices, order receipts, general ledger charges, etc. Forecasting customer demand is a key to providing good-quality service, we can refer to the order receipts to see the demand.
Moving Average Strategy
Two-Three-and Five Year Average of forescasting operating income
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| MOVING AVERAGE OF FORECASTINGG OPERATING INCOME |
Table above shows us, our Wal Mart's forecasting for short, intermediate and long term period. This is the simplest way we use to forecast the inventory demand. For two-year moving average, we use the operating income data from previous two years, then divided by two, so that is also the way for another three and five-moving average, use three or five previous data. The calculations we got there, showing that our forecasting of operating income is continuously increasing time by time. We forecast the demand for inventory based on the moving average data. Therefore, we assume that the proportion of Wal Mart’s forecasting demand are positively related to the increasing of moving average forecasted.
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