10.6 Middle-out approach

The middle-out approach combines bottom-up and top-down approaches. First, the “middle level” is chosen and base forecasts are generated for all the series of this level. For the series above the middle level, coherent forecasts are generated using the bottom-up approach by aggregating the “middle-level” base forecasts upwards. For the series below the “middle level”, coherent forecasts are generated using a top-down approach by disaggregating the “middle level” base forecasts downwards.

This approach is implemented in the forecast package by setting

forecast(..., method = "mo",...).