Components of an Observation Observed demand (O)= Systematic component(S)+Random component(R) Level (current deseasonalized demand) Trend (growth or decline in demand) Seasonality (predictable seasonal fluctuation) Systematic component:Expected value of demand Random component:The part of the forecast that deviates from the systematic component Forecast error:difference between forecast and actual demand SEIEE AU406 7-5+ - SEIEE AU406 7-5 Components of an Observation Observed demand (O) = Systematic component (S) + Random component (R) Level (current deseasonalized demand) Trend (growth or decline in demand) Seasonality (predictable seasonal fluctuation) • Systematic component: Expected value of demand • Random component: The part of the forecast that deviates from the systematic component • Forecast error: difference between forecast and actual demand