Microsoft® Office Excel® 2007: Data Analysis and Business Modeling, Second Edition

Chapter 53. Winter’s Method

Often, we must predict future values of a time series such as monthly costs or monthly product revenues. This is usually difficult because the characteristics of any time series are constantly changing. Smoothing or adaptive methods are usually best suited for forecasting future values of a time series. In this section, we describe the most powerful smoothing method: Winter’s method. To help you understand how Winter’s method works, we will use it to forecast monthly housing starts in the United States (U.S.). Housing starts are simply the number of new homes whose construction begins during a month. We begin by describing the three key characteristics of a time series.

Time Series Characteristics

The behavior ...