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Conservative forecasting with the damped trend

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  • Gardner, Everette S.

Abstract

The “Golden Rule” checklist by Armstrong, Green, and Graefe, in this issue (referred to as AGG below), is a systematic procedure for implementing conservative forecasting principles, and it should help close the long-standing gap between theory and practice. The checklist is both a practical tool and an empirical research agenda. Trend damping is an important part of the checklist, and AGG rely on subjective judgment about when and how damping should be done. I recommend a more objective approach based on the damped trend method of exponential smoothing, which has a long record of success in empirical research.

Suggested Citation

  • Gardner, Everette S., 2015. "Conservative forecasting with the damped trend," Journal of Business Research, Elsevier, vol. 68(8), pages 1739-1741.
    • Handle: RePEc:eee:jbrese:v:68:y:2015:i:8:p:1739-1741
    DOI: 10.1016/j.jbusres.2015.03.033
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    References listed on IDEAS

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    1. Makridakis, Spyros & Hibon, Michele, 2000. "The M3-Competition: results, conclusions and implications," International Journal of Forecasting, Elsevier, vol. 16(4), pages 451-476.
    2. Everette S. Gardner, Jr. & Ed. Mckenzie, 1985. "Forecasting Trends in Time Series," Management Science, INFORMS, vol. 31(10), pages 1237-1246, October.
    3. Armstrong, J. Scott & Green, Kesten C. & Graefe, Andreas, 2015. "Golden rule of forecasting: Be conservative," Journal of Business Research, Elsevier, vol. 68(8), pages 1717-1731.
    4. Gardner Jr., Everette S. & Diaz-Saiz, Joaquin, 2008. "Exponential smoothing in the telecommunications data," International Journal of Forecasting, Elsevier, vol. 24(1), pages 170-174.
    5. Hyndman, Rob J. & Billah, Baki, 2003. "Unmasking the Theta method," International Journal of Forecasting, Elsevier, vol. 19(2), pages 287-290.
    6. Holt, Charles C., 2004. "Author's retrospective on 'Forecasting seasonals and trends by exponentially weighted moving averages'," International Journal of Forecasting, Elsevier, vol. 20(1), pages 11-13.
    7. E S Gardner & E McKenzie, 2011. "Why the damped trend works," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(6), pages 1177-1180, June.
    8. Assimakopoulos, V. & Nikolopoulos, K., 2000. "The theta model: a decomposition approach to forecasting," International Journal of Forecasting, Elsevier, vol. 16(4), pages 521-530.
    9. Everette S. Gardner, 1990. "Evaluating Forecast Performance in an Inventory Control System," Management Science, INFORMS, vol. 36(4), pages 490-499, April.
    10. Holt, Charles C., 2004. "Forecasting seasonals and trends by exponentially weighted moving averages," International Journal of Forecasting, Elsevier, vol. 20(1), pages 5-10.
    11. Li, Qinyun & Disney, Stephen M. & Gaalman, Gerard, 2014. "Avoiding the bullwhip effect using Damped Trend forecasting and the Order-Up-To replenishment policy," International Journal of Production Economics, Elsevier, vol. 149(C), pages 3-16.
    12. R Fildes & K Nikolopoulos & S F Crone & A A Syntetos, 2008. "Forecasting and operational research: a review," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 59(9), pages 1150-1172, September.
    13. Acar, Yavuz & Gardner, Everette S., 2012. "Forecasting method selection in a global supply chain," International Journal of Forecasting, Elsevier, vol. 28(4), pages 842-848.
    14. Armstrong, J. Scott, 2006. "Findings from evidence-based forecasting: Methods for reducing forecast error," International Journal of Forecasting, Elsevier, vol. 22(3), pages 583-598.
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    Cited by:

    1. Sbrana, Giacomo & Silvestrini, Andrea, 2020. "Forecasting with the damped trend model using the structural approach," International Journal of Production Economics, Elsevier, vol. 226(C).
    2. Green, Kesten C. & Armstrong, J. Scott & Graefe, Andreas, 2015. "Golden rule of forecasting rearticulated: Forecast unto others as you would have them forecast unto you," Journal of Business Research, Elsevier, vol. 68(8), pages 1768-1771.

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