Manual Forecast Pro V6

Forecast Pro
Statistical Reference Manual

Eric A. Stellwagen and Robert L. Goodrich
Business Forecast Systems, Inc.

Copyright © 1992-2010 Business Forecast Systems, Inc.
All Rights Reserved Worldwide. No part of this document may be reproduced without
the express written permission of Business Forecast Systems, Inc.

Software Version 6
Manual Last Revised: December 14, 2010Business Forecast Systems, Inc.
68 Leonard Street, Belmont, MA 02478 USA
Phone: 617-484-5050 Fax: 617-484-9219
Email: info@forecastpro.com Web: www.forecastpro.com

Copyright Notice
Copyright © 1992-2010 by Business Forecast Systems, Inc. All Rights Reserved
Worldwide. No part of this manual may be reproduced, transmitted, transcribed, stored in
a retrieval system, or translated into anyhuman or computer language, in any form or by
any means, electronic, mechanical, magnetic, optical, chemical, manual or otherwise,
without express written permission of Business Forecast Systems, Inc., 68 Leonard
Street, Belmont, MA 02478 USA.

Disclaimer
Business Forecast Systems, Inc. makes no representations or warranties with respect to
the contents hereof and specifically disclaimsany implied warranties of merchantability
or fitness for any particular purpose. Further, Business Forecast Systems, Inc. reserves
the right to revise this publication and to make changes from time to time in the contents
hereof without obligation of Business Forecast Systems, Inc. to notify any person or
organization of such revision or change.

Trademarks
Forecast Pro is a registeredtrademark of Business Forecast Systems, Inc.
Other product names mentioned in this manual are trademarks or registered trademarks
of their respective companies and are hereby acknowledged.

Contents

Statistical Reference 
Expert Selection ................................................................................................................ 2 
Simple Methods................................................................................................................. 2 
Exponential Smoothing .................................................................................................... 3 
Conceptual Overview ......................................................................................................... 3 
Models of the Exponential SmoothingFamily ................................................................... 5 
Implementation of Exponential Smoothing in Forecast Pro ............................................... 7 
Statistical Description of Exponential Smoothing .............................................................. 9 
Discrete Distributions..................................................................................................... 15 
Poisson Distribution .......................................................................................................... 15 
Negative Binomial Distribution ........................................................................................ 16 
Croston’s Intermittent Demand Model........................................................................ 17 
Curve Fitting ................................................................................................................... 18 
Box-Jenkins Statistical Models ...................................................................................... 18 
Implementation of Box-Jenkins in Forecast Pro............................................................... 19 
Box-JenkinsBackground .................................................................................................. 20 
Description of the ARIMA Model .................................................................................... 22 
Seasonal Models ............................................................................................................... 25 
Selecting Model Orders...