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Chapter 17 Forecasting with ADAM

Finally, we come to the technicalities of how to produce forecasts using ADAM. We have already discussed in previous section (e.g. Sections 5.3 and 6.2) how conditional expectations can be generated from some of the models, but we have not discussed this in necessary detail. Furthermore, as discussed in Section 1.1 that forecasts should align with specific decisions, but we have not discussed how to do that. In this chapter, we start the discussion with the principles behind calculating the conditional expectations from ADAM models (including ETS, ARIMA, regression and their combinations). We then move to the discussion of producing cumulative forecasts over the forecast horizon, something that is useful in practice, when inventory decisions need to be made. Finally, we discuss in detail various methods for prediction intervals construction, starting from the basic parametric ones and ending with empirical and those that take uncertainty of parameters into account (see Section 16).