In Forecast Value Added (FVA) analysis the accuracy of relatively sophisticated forecasting methods is compared to that of naïve 1 forecasts to see if the extra costs and effort of implementing them is justified. In this note we derive a ratio that indicates the upper bound of a forecasting method's accuracy relative to naïve 1 forecasts when the mean squared error is used to measure one-period-ahead accuracy. The ratio is applicable when a series is stationary or when its first differences are
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- Management - Professor
- Information, Decisions & Operations - Chair in Management Science; Director of Studies MSc in Operations, Logistics & Supply Chain Management
- Smart Warehousing and Logistics Systems - Member
Person: Research & Teaching, Researcher