Exploring the mechanism of grey forecasting models: A perspective from dynamic system modelling

Abstract

The grey forecasting model has been developed for forty years, but there are various understandings of its modelling ideas. The research motivation of this paper is to provide an insight into the understanding of grey forecasting models and demonstrate how grey forecasting model can solve practical problems. Based on the modelling process of grey forecasting models, this paper first discusses the model mechanism from the perspective of dynamic system modelling and describes the model application using perishable products inventory as an example. Then, we introduced the modelling processes and characteristics of grey forecasting models under traditional and direct methods. The research issue of grey forecasting models is summarized by analysing model characteristics, the complete process of model establishment is presented, and the mechanism of each modelling process is elaborated in detail. Next, taking the inventory of perishable products as an example, we discuss how the grey forecasting model solves practical problems, and illustrate the application process of the grey forecasting model through a numerical example of citrus.