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Question: question thomas was asked to forecast the electricity consumption...

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Question : Thomas was asked to forecast the electricity consumption for 2019. He was given data of monthly residential electricity consumption and monthly industrial electricity consumption in the East, Middle and West of Singapore for 2000-2018. Using a hierarchy method, he forecast the aggregate electricity consumption for Jan 2019 is 2400 Gigawatt hours (GWh), and the forecast for residential and industrial electricity consumption are 600 and 1600 GWh, respectively. Dividing the data by region, he got the residential electricity consumption forecast for the East, Middle and West regions are 200, 300 and 100 GWh, respectively, and the industrial electricity consumption forecast for the three regions (i.e., East, Middle and West) are 400, 600 and 800 GWh, respectively. 

 

(a) Draw a diagram (without reconciliation) with the forecasted values displaying the hierarchy levels as described above.

 

(b) Describe the three reconciliation methods: top-down, middle-out and bottom-up. Implement these methods to the forecast values in your diagram from part (a).

 

(c) Discuss one (1) advantage of forecasting using hierarchies. Which reconciliation method is preferred? Please explain.

 

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