How does the IGM (1,1) model correct its current predicted value compared to the standard GM (1,1) model?

Conditions

• Requires a sequence of measured values.
• Used for time series forecasting.

Reasoning, step by step

1. Identify the current predicted value generated by the base model.
2. Calculate the error term, which is the difference between the previous predicted value and the previous immediate mean of the measured value.
3. Subtract the calculated error term from the current predicted value to obtain the final corrected prediction.

Example

The video explains that the IGM (1,1) model corrects the current predicted value by subtracting the error between the previous predicted value and the previous immediate mean of the measured value.

Common misconceptions

• Believing that the IGM (1,1) model uses a completely different mathematical structure than the GM (1,1) model.
• Thinking that the error correction is applied to the previous predicted value rather than the current one.

Watch the explanation

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