Available online at www.sciencedirect.

com

Applied Mathematical Modelling 33 (2009) 1173–1186

www.elsevier.com/locate/apm

Discrete grey forecasting model and its optimization

Nai-ming Xie *, Si-feng Liu
College of Economics and Management, Nanjing University of Aeronautics and Astronautics, 29, Yudao Street, Nanjing,
Jiangsu Province 210016, People’s Republic of China

Received 24 April 2007; received in revised form 13 January 2008; accepted 17 January 2008
Available online 26 January 2008

Abstract

Although the grey forecasting model has been successfully adopted in various fields and demonstrated promising
results, the literatures show its performance could be further improved. For this purpose, this paper proposes a novel dis-
crete grey forecasting model termed DGM model and a series of optimized models of DGM. This paper modifies the algo-
rithm of GM(1, 1) model to enhance the tendency catching ability. The relationship between the two models and the
forecasting precision of DGM model based on the pure index sequence is discussed. And further studies on three basic
forms and three optimized forms of DGM model are also discussed. As shown in the results, the proposed model and
its optimized models can increase the prediction accuracy. When the system is stable approximately, DGM model and
the optimized models can effectively predict the developing system. This work contributes significantly to improve grey
forecasting theory and proposes more novel grey forecasting models.
Ó 2008 Elsevier Inc. All rights reserved.

Keywords: Grey forecasting model; Discrete; Pure index sequence; Accumulating generation

1. Introduction

Modern science and technology, on the basis of high differentiation, has presented a synthetical trend which
resulted in the appearance of many cross-disciplinary theories of systems science. Systems science has revealed
some more profoundly and essentially important internal relations among some disciplines, which have deeply
promoted the integrative progress of modern science and technology as demonstrated [1]. With the help of these
new theories, many complicated or unsolvable problems can be resolved successfully. These theories include
systems theory, information theory, cybernetics, synergetic theory and general systems theory. As the informa-
tion obtained by people is always uncertain and limited, a variety of uncertainty theories emerged. For example,
Zadeh proposed Fuzzy mathematics and Pawlark proposed Rough sets theory [2–4]. Meantime, because of
limited information and knowledge, only part of system structure could be fully realized. To overcome this
problem, Deng proposed grey systems theory.

*
Corresponding author. Tel.: +86 025 84892700.
E-mail addresses: xienaiming@yahoo.com.cn (N.-m. Xie), sfliu@nuaa.edu.cn (S.-f. Liu).

0307-904X/$ - see front matter Ó 2008 Elsevier Inc. All rights reserved.
doi:10.1016/j.apm.2008.01.011
1174 N.-m. Xie, S.-f. Liu / Applied Mathematical Modelling 33 (2009) 1173–1186

Grey systems theory has been successfully utilized in many fields and grey theory of prediction is an impor-
tant embranchment of grey systems theory. There are five main categories of grey prediction such as (i) time
series forecasting, (ii) calamity forecasting, (iii) seasonal calamity forecasting, (iv) topological forecasting and
(v) systematic forecasting. GM(1, 1) model is the main model of grey theory of prediction, i.e. a single variable
first order grey model, which is created with few data (four or more) and still we can get high precision results.
GM(1, 1) model is one of the most widely used technique in the grey system. In recent years, it has also been
successfully employed in various fields and has demonstrated satisfactory results [5–10].
Definition 1.1. Assume that the sequence

X ð0Þ ¼ fxð0Þ ð1Þ; xð0Þ ð2Þ; . . . ; xð0Þ ðnÞg

is an original data sequence, the sequence
X ð1Þ ¼ fxð1Þ ð1Þ; xð1Þ ð2Þ; . . . ; xð1Þ ðnÞg
is the accumulated generation sequence of X(0), where
X
k
xð1Þ ðkÞ ¼ xð0Þ ðiÞ; k ¼ 1; 2; . . . ; n:
i¼1

The sequence
Z ð1Þ ¼ fzð1Þ ð2Þ; zð1Þ ð3Þ; . . . ; zð1Þ ðnÞg
is the mean sequence of X(1), where
1
zð1Þ ðkÞ ¼ ðxð1Þ ðkÞ þ xð1Þ ðk  1ÞÞ; k ¼ 2; 3; . . . ; n:
2
The equation
xð0Þ ðkÞ þ azð1Þ ðkÞ ¼ b ð1Þ
is called the basic form of GM(1, 1) model. The equation
 
b b
^xð1Þ ðk þ 1Þ ¼ xð0Þ ð1Þ  eak þ ; k ¼ 1; 2; . . . ; n  1 ð2Þ
a a
is called the time response equation.
Although GM(1, 1) model had been widely adopted, its predicting performance still could be improved. Up
to the present, there are many scholars proposing new methods to improve the precision of the model. Deng
provided the method of residual sequence amendable. Mu provided the method of optimum grey derivative’s
whitening values [11]. He built an unbiased GM(1, 1) model and proposed a method of estimation of the
parameters. Wang and Song provided the center approach to amend the model GM(1, 1), they derived an
adjusting grey model [12,13]. Tan provided the structure method of background values in model GM(1, 1),
and a simple calculating formula of background value was reestablished which had strong adaptability
[14]. Liu, Liu and Luo provided the method of optimum time response sequence, and they utilized the least
square method to find the constant number c in the time response sequence of basic equation of GM(1, 1),
then created the optimum time response sequence of basic equation for model GM(1, 1) [15–17]. All these
methods can reduce the error partially and advance the forecasting precision, but they could not solve the
problem completely. Through analyzing systematically, we know that in GM(1, 1) model, the method of esti-
mating parameters is the discrete equation and the method of simulating and forecasting is the continuous
equation. The different forms of the discrete equation and the continuous equation determined could not equal
accurately. So the skip from the discrete equation to the continuous equation is just the problem which caused
the error of simulating and forecasting, even based on pure index sequence. In this paper, we will propose a
novel model to solve the problem. Furthermore, different iterative datum value influences the simulative and
predicative results [18]. We solve this sensitive problem of iterative datum value by the optimum method. And
 N.-m. Xie, S.-f. Liu / Applied Mathematical Modelling 33 (2009) 1173–1186 1175

we will study on the relationship of the proposed model and GM(1, 1) model, analyze the precision of the pro-
posed model based on pure index sequence and propose more optimized models.
The remaining paper is organized as follows. In Section 2, a novel model named DGM model is proposed
and discussed. The relationship between DGM model and GM(1, 1) model is studied. Also the precision of the
DGM model based on pure index sequence is studied. In Section 3, three basic forms of DGM model and
three optimized models are proposed. Then, the parameters formula and recursive equations are studied.
Finally, Section 4 comes to the conclusions of this paper.

2. The proposed grey forecasting model

In this section, we research on the proposed forecasting model. We will give out the definition of the DGM
model and we will research on the relationship of the DGM model and the GM(1, 1) model. Finally, we ana-
lyze the precision of the model based on the pure index sequence.

2.1. The definition of discrete grey model

Definition 2.1. The equation

xð1Þ ðk þ 1Þ ¼ b1 xð1Þ ðkÞ þ b2 ð3Þ
is called discrete grey model abbreviated as DGM.

^ ¼ ðb ; b ÞT is a sequence of parameters, and

Theorem 2.1. If b 1 2

2 3 2 3
xð1Þ ð2Þ xð1Þ ð1Þ 1
6 xð1Þ ð3Þ 7 6 xð1Þ ð2Þ 17
6 7 6 7
Y ¼6
6 .. 7;
7 6
B¼6 ..
7
.. 7
4 . 5 4 . .5
xð1Þ ðnÞ xð1Þ ðn  1Þ 1

then the least squares estimate sequence of the grey differential equation
xð1Þ ðk þ 1Þ ¼ b1 xð1Þ ðkÞ þ b2
satisfies
^ ¼ ðBT BÞ1 BT Y :
b

Proof. Substitute all data values into the grey differential equation

xð1Þ ðk þ 1Þ ¼ b1 xð1Þ ðkÞ þ b2

gives that

xð1Þ ð2Þ ¼ b1 xð1Þ ð1Þ þ b2 ;

xð1Þ ð3Þ ¼ b1 xð1Þ ð2Þ þ b2 ;
... ... ... ...;
ð1Þ ð1Þ
x ðnÞ ¼ b1 x ðn  1Þ þ b2 :
^ for the evaluated values of b1 and b2, substitute x(1)(k + 1), k = 1, 2, . . . , n  1 with
That is, Y ¼ Bb,
(1) ^ Let
b1x (k) + b2, which gives the error sequence e ¼ Y  Bb.
X
n1
^ T ðY  BbÞ
S ¼ eT e ¼ ðY  BbÞ ^ ¼ 2
ðxð1Þ ðk þ 1Þ  b1 xð1Þ ðkÞ  b2 Þ :
k¼1
1176 N.-m. Xie, S.-f. Liu / Applied Mathematical Modelling 33 (2009) 1173–1186

The values of b1, b2 make S minimum and should satisfy

8
nP
1
>
> oS ð1Þ ð1Þ ð1Þ
>
< ob ¼ 2 ðx ðk þ 1Þ  b1 x ðkÞ  b2 Þ  x ðkÞ ¼ 0;
1
k¼1
>
> nP
1
> oS
: ob ¼ 2 ðxð1Þ ðk þ 1Þ  b1 xð1Þ ðkÞ  b2 Þ ¼ 0:
2
k¼1

Solve the equations, then we can get

Pn1 ð1Þ ð1Þ 1
Pn1 ð1Þ Pn1 ð1Þ
k¼1 x ðk þ 1Þx ðkÞ  n1 k¼1 x ðk þ 1Þ k¼1 x ðkÞ
b1 ¼ Pn1 ð1Þ 2 1
Pn1 ð1Þ 2
k¼1 ðx ðkÞÞ  n1 ð k¼1 x ðkÞÞ

and
" #
1 X
n1 X
n1
b2 ¼ xð1Þ ðk þ 1Þ  b1 xð1Þ ðkÞ :
n  1 k¼1 k¼1

^ it follows that
From Y ¼ Bb,
^ ¼ BT Y ;
BT Bb ^ ¼ ðBT BÞ1 BT Y :
b
But
2 3T 2 3 2 3
xð1Þ ð1Þ 1 xð1Þ ð1Þ 1 nP
1 nP
1
ð1Þ 2 ð1Þ
6 17 6 xð1Þ ð2Þ
17 ðx ðkÞÞ x ðkÞ 7
6 xð1Þ ð2Þ 7 6 7 6
BT B ¼ 6 7 6 7¼66
k¼1 k¼1 7
7;
6 .. .. 7 6 .. .. 7 4 nP 1 5
4 . .5 4. . 5 ð1Þ
x ðkÞ n1
ð1Þ
x ðn  1Þ 1 xð1Þ ðn  1Þ
1 k¼1
2 3
nP1
ð1Þ
1 6n  1  x ðkÞ 7
6 k¼1 7
ðBT BÞ1 ¼ Pn1 ð1Þ hP i2  6 n1 7
2 n1 ð1Þ 4 P ð1Þ nP
1
25
ðn  1Þ k¼1 ðx ðkÞÞ  k¼1 x ðkÞ  x ðkÞ ðxð1Þ ðkÞÞ
k¼1 k¼1

and
2 3T 2 ð1Þ 3 2 3
xð1Þ ð1Þ 1 x ð2Þ nP
1
ð1Þ ð1Þ
6 xð1Þ ð2Þ 17 6 ð1Þ 7 x ðkÞ  x ðk þ 1Þ 7
6 7 6 x ð3Þ 7 6
BT Y ¼ 6 7 6 7¼6
6
k¼1 7
7:
6 .. .. 7 6 .. 7 4 nP1 5
4 . . 5 4. 5 ð1Þ
x ðk þ 1Þ
xð1Þ ðn  1Þ 1 xð1Þ ðnÞ k¼1

Therefore,

^ ¼ ðBT BÞ1 BT Y ¼ 1
b Pn1 Pn1 2 2
ðn  1Þ k¼1 ðxð1Þ ðkÞÞ
 ½ k¼1 xð1Þ ðkÞ
2 nP
1 nP
1 nP
1
3
ð1Þ ð1Þ ð1Þ ð1Þ
6 ðn  1Þ x ðkÞx ðk þ 1Þ  x ðkÞ x ðk þ 1Þ 7
6 k¼1 k¼1 k¼1 7
6 7
4 nP 1 nP
1 nP1 nP
1
25
 xð1Þ ðkÞ xð1Þ ðkÞxð1Þ ðk þ 1Þ þ xð1Þ ðk þ 1Þ ðxð1Þ ðkÞÞ
k¼1 k¼1 k¼1 k¼1
2 Pn1 Pn1 ð1Þ Pn1 ð1Þ 3
xð1Þ ðkþ1Þxð1Þ ðkÞn1
1x ðkþ1Þ x ðkÞ
6 Pn1 ð1Þ 2 1 Pn1 ð1Þ 2k¼1
k¼1
k¼1
7 T
¼4 k¼1
ðx ðkÞÞ  n1 k¼1
x ðkÞ 5 ¼ ½b1 ; b2  : 
P Pn1 ð1Þ
1
n1
½ n1 ð1Þ
k¼1 x ðk þ 1Þ  b1 k¼1 x ðkÞ
 N.-m. Xie, S.-f. Liu / Applied Mathematical Modelling 33 (2009) 1173–1186 1177

^ are the same as in Theorem 2.1. That is

Theorem 2.2. Assume that B; Y ; b

^ ¼ ½b ; b  ¼ ðBT BÞ1 BT Y
b 1 2

then the following holds true.

1. Set x(1)(1) = x(0)(1), then recursive function is given by

1  bk1
^xð1Þ ðk þ 1Þ ¼ bk1 xð0Þ ð1Þ þ b ; k ¼ 1; 2; . . . ; n  1 ð4Þ
1  b1 2
or
 
b2 b2
ð1Þ
^x ðk þ 1Þ ¼ bk1 xð0Þ ð1Þ  þ ; k ¼ 1; 2; . . . ; n  1: ð5Þ
1  b1 1  b1
2. The restored values of ^xð0Þ ðkÞ can be given by
^xð0Þ ðk þ 1Þ ¼ að1Þ^xð1Þ ðk þ 1Þ ¼ ^xð1Þ ðk þ 1Þ  ^xð1Þ ðkÞ; k ¼ 1; 2; . . . ; n  1:

Proof

1. Substitute b1, b2 into Eq. (3), then

^xð1Þ ðk þ 1Þ ¼ b1^xð1Þ ðkÞ þ b2 ¼ b1 ðb1^xð1Þ ðk  1Þ þ b2 Þ þ b2 ¼   
¼ bk1^xð1Þ ð1Þ þ ðbk1
1 þ bk2
1 þ    þ b1 þ 1Þ  b2 :
Let x(1)(1) = x(0)(1), then
1  bk1
^xð1Þ ðk þ 1Þ ¼ bk1 xð0Þ ð1Þ þ b :
1  b1 2
X
kþ1 X
k
2. ^xð1Þ ðk þ 1Þ  ^xð1Þ ðkÞ ¼ ^xð0Þ ðiÞ  ^xð0Þ ðiÞ ¼ ^xð0Þ ðk þ 1Þ: 
i¼1 i¼1

2.2. The relationship of DGM model and GM(1, 1) model

From Definitions 1.1 and 2.1, we know the structure of DGM model and GM(1, 1) model. Substitute
zð1Þ ðkÞ ¼ 12 ðxð1Þ ðkÞ þ xð1Þ ðk  1ÞÞ into Eq. (1), we can get
1  0:5a ð1Þ b
xð1Þ ðkÞ ¼ x ðk  1Þ þ ; k ¼ 2; 3; . . . ; n: ð6Þ
1 þ 0:5a 1 þ 0:5a
For convenience, we take the values of k from 1, and Eq. (6) becomes
1  0:5a ð1Þ b
xð1Þ ðk þ 1Þ ¼ x ðkÞ þ ; k ¼ 1; 2; . . . ; n  1: ð7Þ
1 þ 0:5a 1 þ 0:5a
The form of Eq. (7) is the same with Eq. (3). So we suppose that
1  0:5a b
¼ b1 ; ¼ b2 ;
1 þ 0:5a 1 þ 0:5a
then we can get
2ð1  b1 Þ 2b2 b b2
a¼ ; b¼ ; ¼ :
1 þ b1 1 þ b1 a 1  b1
We can research on the relationship of the DGM model and the GM(1, 1) model. Separate the right of Eq. (2),
we can get
1178 N.-m. Xie, S.-f. Liu / Applied Mathematical Modelling 33 (2009) 1173–1186

b
^xð1Þ ðk þ 1Þ ¼ xð0Þ ð1Þeak þ ð1  eak Þ; k ¼ 1; 2; . . . ; n  1: ð8Þ
a
Outspread ea and b1 ¼ 1þ0:5a
10:5a
with MacLaurin formula
a2 a3 na
n
ea ¼ 1  a þ  þ    þ ð1Þ þ oðan Þ
2! 3! n!
1  0:5a
b1 ¼
1 þ 0:5a
 
a a2 na
n
¼ 1  a 1  þ 2 þ    þ ð1Þ n þ oðan Þ
2 2 2
2 3 nþ1
a a nþ1 a
¼ 1  a þ  2 þ    þ ð1Þ þ oðanþ1 Þ
2 2 2n
Due to the value of a that is less, the influence to the time response equation and recursive equation is lesser,
we consider the first four items, that is
a2 a3
ea ¼ 1  a þ  ;
2 6
2
a a3
b1 ¼ 1  a þ  :
2 4
Set tiny difference D = ea  b1, then
a3 a3 a3
D ¼ ea  b1 ¼  þ ¼ :
6 4 12
To the different values of a, the values of jDj are shown in Table 1.
Therefore, when the value of a is less, b1  ea, substitute ea with b1, then Eq. (8) becomes
b2 1  bk1
^xð1Þ ðk þ 1Þ ¼ xð0Þ ð1Þ  bk1 þ  ð1  bk1 Þ ¼ xð0Þ ð1Þbk1 þ b ; k ¼ 1; 2; . . . ; n  1: ð9Þ
1  b1 1  b1 2
Eq. (9) is the same with Eq. (4). Therefore, DGM model and GM(1, 1) model can be considered as different
expressions of the same model. When the value of a is less, DGM model and GM(1, 1) model can substitute
each other.

2.3. The forecasting precision analysis of DGM model based on the pure index sequence

The precision of GM(1, 1) model is an important problem. Many scholars pay attention on it and have
made some progress. But they could not solve the problem completely. In the paper [19] Liu simulated the
precisions of GM(1, 1) model with pure index sequence. The results indicate that GM(1, 1) model is provided
with a range and there are errors when we do the long-time data forecasting. Now, we simulate the DGM
model with pure index sequence.
Set the original data sequence as
 
X ð0Þ ¼ ac; ac2 ; ac3 ; . . . ; acn ; c > 0 ð10Þ

then the following trend is

Table 1
Different values of jDj with different a
The values of a 0.1 0.2 0.3 0.5 0.8 1
The values of jDj 0.000083 0.000667 0.00225 0.010417 0.04267 0.08333
 N.-m. Xie, S.-f. Liu / Applied Mathematical Modelling 33 (2009) 1173–1186 1179

xð0Þ ðkÞ ¼ ack ; k ¼ n þ 1; n þ 2; . . .

Accumulating the generation of X(0), we get

( )
X
n
ð1Þ 2 2 3 i
X ¼ ac; aðc þ c Þ; aðc þ c þ c Þ; . . . ; a c ;
i¼1
2 3 2 3
aðc þ c2 Þ ac 1
6 aðc þ c2 þ c3 Þ 7 6 aðc þ c2 Þ 1 7
6 7 6 7
6 7 6 7
6
Y ¼6 .
.. 7; 6
B¼6 .
.. 7;
7 1 7
6 7 6 7
4 Pn
i
5 4 nP 1 5
a c i
a c 1
i¼1 i¼1

^ ¼ ðBT BÞ1 BT Y ¼ c ;
b
ac
b2 1  ck X
kþ1
^xð1Þ ðk þ 1Þ ¼ xð0Þ ð1Þ  bk1 þ  ð1  bk1 Þ ¼ ac  ck þ  ac ¼ a ci :
1  b1 1c i¼1

The restored values

X
k X
k1
^xð0Þ ðkÞ ¼ ^xð1Þ ðkÞ  ^xð1Þ ðk  1Þ ¼ a ci  a ci ¼ ack :
i¼1 i¼1

ð0Þ (0)
^x ðkÞ is equal to x (k). Therefore, the DGM model is precise to simulate and forecast. In Eq. (10), the
value of a and c is discretional. So, we can use the DGM model to simulate and forecast the sequence when
the sequence is close to pure index rule. To analyze the different results of DGM model and GM(1, 1) model
based on pure index sequence, we know that the error of GM(1, 1) is the tiny difference of ea and b1. When we
do short-term forecasting or when developing coefficient a is less, the tiny difference jDj influencing the DGM
model is less and the simulating and forecasting precisions are fine. When we do long-term forecasting or when
developing coefficient a is large, the tiny difference jDj influencing the DGM model is less and the simulating
and forecasting precisions are bad. Sometimes, the results are unacceptable.

3. The extension and optimization of DGM model

The DGM model in Section 2 is based on the hypothesis that the first datum of sequence is invariable. The
invariable datum is called the iterative datum. Actually, the first datum is the oldest information in a sequence.
So, the hypothesis violates with the fact. To improve the precision of the model, we can choose the iterative
datum as we needed. The same with GM(1, 1) model, we can choose the first datum, random medium datum
or the last datum of a sequence as an invariable datum, i.e., the original datum is equal to the simulative value
in this point. So, we can construct three kinds of discrete grey models.

3.1. Three forms of discrete grey model

Assume that the sequence

X ð0Þ ¼ fxð0Þ ð1Þ; xð0Þ ð2Þ; . . . ; xð0Þ ðnÞg

is a raw data sequence, the sequence

X ð1Þ ¼ fxð1Þ ð1Þ; xð1Þ ð2Þ; . . . ; xð1Þ ðnÞg

is the accumulated generation sequence of X(0), where

1180 N.-m. Xie, S.-f. Liu / Applied Mathematical Modelling 33 (2009) 1173–1186

X
k
xð1Þ ðkÞ ¼ xð0Þ ðiÞ; k ¼ 1; 2; . . . ; n:
i¼1

With the different iterative datum, we can construct three forms of discrete grey model.

1. The equation
(
^xð1Þ ðk þ 1Þ ¼ b1^xð1Þ ðkÞ þ b2 ;
ð11Þ
^xð1Þ ð1Þ ¼ xð1Þ ð1Þ ¼ xð0Þ ð1Þ
is called the starting-point fixed discrete grey model abbreviated as SDGM, where ^xð1Þ ðkÞ is the simulative
value of x(1)(k), b1 and b2 are the parameters of the model and ^xð1Þ ð1Þ is the iterative datum.
2. The equation
8 ð1Þ ð1Þ
< ^x ðk þ 1Þ ¼ b1^x ðkÞ þ b2 ;
P
m ð12Þ
: ^xð1Þ ðmÞ ¼ xð1Þ ðmÞ ¼ xð0Þ ðiÞ; 1 < m < n
i¼1

is called the middle-point fixed discrete grey model abbreviated as MDGM, where ^xð1Þ ðkÞ is the simulative
value of x(1)(k), b1 and b2 are the parameters of the model and ^xð1Þ ðmÞ is the iterative datum.
3. The equation
8 ð1Þ ð1Þ
< ^x ðk þ 1Þ ¼ b1^x ðkÞ þ b2 ;
P
n ð13Þ
: ^xð1Þ ðnÞ ¼ xð1Þ ðnÞ ¼ xð0Þ ðiÞ
i¼1

is called the ending-point fixed discrete grey model abbreviated as MDGM, where ^xð1Þ ðkÞ is the simulative
value of x(1)(k), b1 and b2 are the parameters of the model and ^xð1Þ ðnÞ is the iterative datum.

3.2. The analysis on the iterative datum

In Section 3.1, we know that different iterative datum gives birth to different models. But neither of the dis-
crete grey models is the optimized model. The construction of DGM model depends on the iterative datum
and the less difference of the iterative datum can cause the large variety of simulative or predicative values
of the sequence. It is a disadvantage to the forecasting. We can further analyze the results caused by different
iterative datum.
In this section, we analyze mainly on the SDGM model and we can come to the same conclusions on the
MDGM model or EDGM model. In SDGM model, because the iterative datum ^xð1Þ ð1Þ ¼ xð1Þ ð1Þ ¼ xð0Þ ð1Þ, the
simulative curve must across the point (1, x(0)(1)). But the optimized curve is not always get across the point
(1, x(0)(1)) on the least square principle. So, the hypothesis ^xð1Þ ð1Þ ¼ xð1Þ ð1Þ ¼ xð0Þ ð1Þ as the iterative datum is
inaccurate. We can analyze the problem on the figures directly. For example, Fig. 1.

x (1) (k )
curve a′
curve a
curve a′′

a′
a
a′′
1 2 n k
Fig. 1. Simulative curves starting-point as the iterative datum.
 N.-m. Xie, S.-f. Liu / Applied Mathematical Modelling 33 (2009) 1173–1186 1181

Suppose that the curve a is the very curve according to the least square method. So, the curve a must get
across to the point a, i.e. iterative datum (1, x(0)(1)), but ^xð1Þ ð1Þ may be larger than x(0)(1) or smaller than
x(0)(1). When x(0)(1) = a0 the simulative curve we get is the curve a0 . When x(0)(1) = a00 , the simulative curve
we get is the curve a00 . Curve a0 and curve a00 both depart with the curve a. Theoretically, we have the recursive
equation of SDGM model
1  bk1
^xð1Þ ðk þ 1Þ ¼ bk1^xð1Þ ð1Þ þ b ; k ¼ 1; 2; . . . ; n  1:
1  b1 2
The restored value of the model
  !
ðk1Þ
1  bk1 ðk1Þ 1  b1
^xð0Þ ðk þ 1Þ ¼ ^xð1Þ ðk þ 1Þ  ^xð1Þ ðkÞ ¼ bk1^xð1Þ ð1Þ þ b  b1 ^xð1Þ ð1Þ þ  b2
1  b1 2 1  b1
ðk1Þ
ðk1Þ b1  bk1
¼ ðbk1  b1 Þ  ^xð1Þ ð1Þ þ  b2 :
1  b1
ðk1Þ
On account of b1 and b2 can be got by the least square method uniquely. And the value of ðbk1  b1 Þ and
ðk1Þ ðk1Þ
b2  ðb1  bk1 Þ=ðb1  bk1 Þð1  b1 Þð1  b1 Þ are exclusive. If x(1)(1) is not on the curve a, i.e. when
^x ð1Þ > x ð1Þ or ^x ð1Þ < xð1Þ ð1Þ, the value of ^xð0Þ ðk þ 1Þ will be on the high or on the low side of the curve
ð1Þ ð1Þ ð1Þ

a accordingly. We can come to the same conclusions for MDGM model and EDGM model. The iterative
datum ^xð1Þ ðmÞ is departed from x(1)(m) shown in Fig. 2 for MDGM model. The iterative datum ^xð1Þ ðnÞ is
departed from x(1)(n) shown in Fig. 3 for EDGM model. Therefore, different values of the iterative datum
^xð1Þ ð1Þ, ^xð1Þ ðmÞ and ^xð1Þ ðnÞ can influence on the simulative value of the sequence. We must amend the iterative
datum to correct the results.

x (1) (k )
curve b′
curve b
b′ curve b′′
b
b′′

1 2 m n k
Fig. 2. Simulative curves middle-point as the iterative datum.

x (1) (k )
c′ curve c′
c curve c
c ′′ curve c′′

1 2 n k
Fig. 3. Simulative curves ending-point as the iterative datum.
1182 N.-m. Xie, S.-f. Liu / Applied Mathematical Modelling 33 (2009) 1173–1186

3.3. Optimized discrete grey models

To solve the problem that iterative datum influence to the simulative value, add an amendable item to iter-
ative datum and counteract the difference caused by iterative datum. The SDGM model, MDGM model and
EDGM model become the new forms.

1. The equation
(
^xð1Þ ðk þ 1Þ ¼ b1^xð1Þ ðkÞ þ b2 ;
ð14Þ
^xð1Þ ð1Þ ¼ xð1Þ ð1Þ þ b3
is called the optimized starting-point fixed discrete grey model abbreviated as OSDGM, where ^xð1Þ ðkÞ is
the simulative value of x(1)(k), b1, b2 and b3 are the parameters of the model and ^xð1Þ ð1Þ is the iterative
datum.
2. The equation
(
^xð1Þ ðk þ 1Þ ¼ b1^xð1Þ ðkÞ þ b2 ;
ð15Þ
^xð1Þ ðmÞ ¼ xð1Þ ðmÞ þ b3

is called the optimized middle-point fixed discrete grey model abbreviated as OMDGM, where ^xð1Þ ðkÞ is
the simulative value of x(1)(k), b1, b2 and b3 are the parameters of the model and ^xð1Þ ðmÞ is the iterative
datum.
3. The equation
(
^xð1Þ ðk þ 1Þ ¼ b1^xð1Þ ðkÞ þ b2 ;
ð16Þ
^xð1Þ ðnÞ ¼ xð1Þ ðnÞ þ b3
is called the optimized ending-point fixed discrete grey model abbreviated as OEDGM, where ^xð1Þ ðkÞ is
the simulative value of x(1)(k), b1, b2 and b3 are the parameters of the model and ^xð1Þ ðnÞ is the iterative
datum.

3.4. The solution of parameters

There are three parameters in optimized discrete grey models. The solutions of b1 and b2 are the same with
general discrete grey model. That is
Pn1 ð1Þ
Pn1 ð1Þ Pn1 ð1Þ
k¼1 x ðk þ 1Þxð1Þ ðkÞ  n1
1
k¼1 x ðk þ 1Þ k¼1 x ðkÞ
b1 ¼ Pn1 ð1Þ
P 2 ð17Þ
2 1 n1 ð1Þ
k¼1 ðx ðkÞÞ  n1 k¼1 x ðkÞ

and
" #
1 X
n1 X
n1
ð1Þ ð1Þ
b2 ¼ x ðk þ 1Þ  b1 x ðkÞ : ð18Þ
n  1 k¼1 k¼1

To b3, we solve the value as the example of OSDGM model. We can come to the same conclusions in
OMDGM model and OEDGM model. We solve the value of b3 by the least square method and construct
an unrestraint optimized model. Make the sum of error square between ^xð1Þ ðkÞ and x(1)(k) minimum, i.e. solve
the optimized problem.

X
n
 ð1Þ 2
min ^x ðkÞ  xð1Þ ðkÞ :
b3
k¼1
 N.-m. Xie, S.-f. Liu / Applied Mathematical Modelling 33 (2009) 1173–1186 1183

1bk
Substitute b1 and b2 into ^xð1Þ ðk þ 1Þ ¼ bk1^xð1Þ ð1Þ þ 1b11  b2 , let
Xn n1 
X  2
ð1Þ ð1Þ 2 2 k ð1Þ 1  bk1 ð1Þ
S¼ ½^x ðkÞ  ^x ðkÞ ¼ b3 þ b1^x ð1Þ þ  b  x ðk þ 1Þ
k¼1 k¼1
1  b1 2
n1 
X 2
1  bk1
¼ b23 þ bk1 xð1Þ ð1Þ þ bk1  b3 þ  b2  xð1Þ ðk þ 1Þ :
k¼1
1  b1
Then
n1 
X
dS 1  bk1
¼ 2b3 þ 2 bk1 xð1Þ ð1Þ þ bk1  b3 þ  b2  xð1Þ ðk þ 1Þ  bk1 ¼ 0:
db3 k¼1
1  b1
So,
Pn1 h ð1Þ k ð1Þ 1bk1
i
k
k¼1 x ðk þ 1Þ  b1 x ð1Þ  1b1
 b 2  b1
b3 ¼ Pn1 2
: ð19Þ
1 þ k¼1 ðbk1 Þ
Combining Eqs. (17)–(19), we can get simultaneous equations
8 Pn1 ð1Þ Pn1 ð1Þ Pn1 ð1Þ
> x ðkþ1Þxð1Þ ðkÞn1 1 x ðkþ1Þ x ðkÞ
>
> b ¼ k¼1
P k¼1
P 2k¼1 ;
>
> 1 n1 2 n1
>
>
1
ðxð1Þ ðkÞÞ n1 xð1Þ ðkÞ
>
> n1 k¼1 k¼1

< P ð1Þ P ð1Þ
n1
1
b2 ¼ n1 x ðk þ 1Þ  b1 x ðkÞ ; ð20Þ
>
> k¼1 k¼1
>
> h
Pn1 ð1Þ i
>
> 1bk
>
> x ðkþ1Þbk1 xð1Þ ð1Þ1b1 b2 bk1
>
: b3 ¼
k¼1
Pn1 k 2 1 :
1þ ðb1 Þ
k¼1

Obviously, the curve of OSDGM model, OMDGM model and OEDGM model superposes with the opti-
mized simulative curve. To the same sequence, we can get the same results to construct these three different
grey models. Therefore, we can choose the OSDGM model, OMDGM model and OEDGM model randomly
to simulate and forecast.

3.5. Recursive equations of optimized discrete grey models

With the values of b1, b2 and b3, we can give out the formula of simulative and predicative sequence which
we called recursive equations of optimized discrete grey models.
Theorem 3.1. To the OSDGM model, parameters are the same as in Eq. (20), then

1. The recursive equation is

 
k b2 b2
^x ðk þ 1Þ ¼ b1 xð0Þ ð1Þ þ b3 
ð1Þ
þ ; k ¼ 1; 2; . . . ; n  1:
1  b1 1  b1
2. The restored value
^xð0Þ ðk þ 1Þ ¼ að1Þ^xð1Þ ðk þ 1Þ ¼ ^xð1Þ ðk þ 1Þ  ^xð1Þ ðkÞ; k ¼ 1; 2; . . . ; n  1:

Proof

1. Substitute b1 and b2 into Eq. (14), then

^xð1Þ ðk þ 1Þ ¼ b1^xð1Þ ðkÞ þ b2 ¼ b1 ðb1^xð1Þ ðk  1Þ þ b2 Þ þ b2 ¼   
¼ bk1^xð1Þ ð1Þ þ ðbk1
1 þ bk2
1 þ    þ b1 þ 1Þ  b2 :
1184 N.-m. Xie, S.-f. Liu / Applied Mathematical Modelling 33 (2009) 1173–1186

Let ^xð1Þ ð1Þ ¼ xð1Þ ð1Þ þ b3 ¼ xð0Þ ð1Þ þ b3 , then

1bk
^xð1Þ ðk þ 1Þ ¼ bk1^xð1Þ ð1Þ þ 1b1  b2
1

1bk
¼ bk1 ðxð1Þ ð1Þ þ b3 Þ þ 1b11  b2
1bk
¼ bk1 xð0Þ ð1Þ þ bk1  b3 þ 1b11  b2 :
Pkþ1 Pk
2. ^xð1Þ ðk þ 1Þ  ^xð1Þ ðkÞ ¼ i¼1 ^xð0Þ ðiÞ  i¼1^xð0Þ ðiÞ ¼ ^xð0Þ ðk þ 1Þ. h

Theorem 3.2. To the OMDGM model, parameters are the same as in Eq. (20), then

1. The recursive equation is

 
ð1Þ ðkmÞ b2 b2
^x ðkÞ ¼ b1 xð1Þ ðmÞ þ b3  þ ; k ¼ 1; 2; . . . ; 1 6 m 6 n:
1  b1 1  b1
2. The restored value
^xð0Þ ðk þ 1Þ ¼ að1Þ^xð1Þ ðk þ 1Þ ¼ ^xð1Þ ðk þ 1Þ  ^xð1Þ ðkÞ; k ¼ 1; 2; . . .

Proof. The same with Theorem 3.1, omitted here. h

Theorem 3.3. To the OEDGM model, parameters are the same as in Eq. (20), then

1. The recursive equation is

 
ðknÞ b2 b2
^xð1Þ ðkÞ ¼ b1 xð1Þ ðnÞ þ b3  þ ; k ¼ 1; 2; . . .
1  b1 1  b1
2. The restored value
^xð0Þ ðk þ 1Þ ¼ að1Þ^xð1Þ ðk þ 1Þ ¼ ^xð1Þ ðk þ 1Þ  ^xð1Þ ðkÞ; k ¼ 1; 2; . . .

Proof. The same with Theorem 3.1, omitted here. h

4. An example for comparing GM(1, 1) model, DGM model and OSDGM model

In this section, we will construct a GM(1, 1) model, a DGM model and a OSDGM model with the same
data sequence. Then, we will compare the simulative values and the relative simulative errors of the three
models.
Example 4.1. If the original data sequence is
X ð0Þ ¼ fxð0Þ ð1Þ; xð0Þ ð2Þ; . . . ; xð0Þ ð6Þg ¼ ð21:1; 26:6; 36:1; 52:3; 80:1; 126:8Þ
Construct GM(1, 1) model, DGM model and OSDGM model with the sequence and compare the results.
According to the original data sequence X(0), we can obtain the accumulating generated sequence
X ð1Þ ¼ fxð1Þ ð1Þ; xð1Þ ð2Þ; . . . ; xð1Þ ð6Þg ¼ ð21:1; 47:7; 83:8; 136:1; 216:2; 343Þ
and the neighbor mean generated sequence
Z ð1Þ ¼ fzð1Þ ð2Þ; zð1Þ ð3Þ; . . . ; zð1Þ ð6Þg ¼ ð34:4; 65:75; 109:95; 176:15; 279:6Þ:
For GM(1, 1) model, we can get the parameters
a ¼ 0:412662; b ¼ 9:425748
 N.-m. Xie, S.-f. Liu / Applied Mathematical Modelling 33 (2009) 1173–1186 1185

and the time response equation

 
b ak b
^x ðk þ 1Þ ¼ x ð1Þ  e þ ¼ 43:941305e0:412662k  22:841305;
ð1Þ ð0Þ
k ¼ 1; 2; 3; 4; 5: ð21Þ
a a
For DGM model, we can get the parameters
b1 ¼ 1:519; b2 ¼ 11:938
and the recursive function
 
b2 b2
^xð1Þ ðk þ 1Þ ¼ bk1 xð0Þ ð1Þ  þ ¼ 44:10193  1:519k  23:00193; k ¼ 1; 2; 3; 4; 5: ð22Þ
1  b1 1  b1
For OSDGM model, we can get the parameters
b1 ¼ 1:697; b2 ¼ 8:921; b3 ¼ 20:754; b4 ¼ 0:005322
and the recursive function
 
k b2 b2
^x ðk þ 1Þ ¼ b1 ^xð0Þ ð1Þ 
ð1Þ
þ ¼ 45:21296  1:519k  23:00193; k ¼ 1; 2; 3; 4; 5: ð23Þ
1  b1 1  b1
According to Eqs. (21)–(23), we can get the simulative values of X(1). Then, we can calculate the simulative
values of X(0) by the equation
^xð0Þ ðk þ 1Þ ¼ ^xð1Þ ðk þ 1Þ  ^xð1Þ ðkÞ; k ¼ 1; 2; 3; 4; 5:
and the simulative errors by the equation
 ð0Þ 
x ðkÞ  ^xð0Þ ðkÞ
eðkÞ ¼  100%:
xð0Þ ðkÞ
The simulative values and the relative simulative errors are shown in Table 2.
It can been seen from Table 2 that the simulative results of OSDGM model are the best, the simulative
results of DGM model are inferior to OSDGM model and the results of GM(1, 1) model are inferior to DGM
model. Similarly, we can obtain predictive values of GM(1, 1) model, DGM model and OSDGM model as
shown in Table 3.

Table 2
The simulative values and errors of GM(1, 1) model, DGM model and OSDGM model
Original GM(1, 1) model DGM model OSDGM model
value
Simulative value Error e(k) Simulative value Error e(k) Simulative value Error e(k)
^xð0Þ ðkÞ (%) ^xð0Þ ðkÞ (%) ^xð0Þ ðkÞ (%)
x(0)(2) 26.6 22.4468 15.61 22.8889 13.95 23.4805 11.73
x(0)(3) 36.1 33.9133 6.06 34.7682 3.69 35.6746 1.18
x(0)(4) 52.3 51.2375 2.03 52.813 0.98 54.2014 3.64
x(0)(5) 80.1 77.4113 3.36 80.2229 0.15 82.3499 2.81
x(0)(6) 126.8 116.955 7.76 121.8586 3.9 125.1167 1.33
e(avg) 6.96 4.53 4.14

Table 3
The predictive values and errors of GM(1, 1) model, DGM model and OSDGM model
Predictive value of GM(1, 1) model ^xð0Þ ðkÞ Predictive value of DGM model ^xð0Þ ðkÞ Predictive value of OSDGM model ^xð0Þ ðkÞ
x(0)(7) 176.701 185.103 190.0935
x(0)(8) 266.966 281.172 288.8148
x(0)(9) 403.341 427.1 438.8051
1186 N.-m. Xie, S.-f. Liu / Applied Mathematical Modelling 33 (2009) 1173–1186

5. Conclusions

Since the proposed grey systems theory, the grey forecasting model has been successfully adopted in all
kinds of fields. However, the precision of grey forecasting model may be unsatisfied sometimes. Especially
in predicting the long-term developing trend of a data sequence. Therefore, this paper has proposed a novel
model, named DGM model, and its optimized models to enhance the tendency catching ability.
In GM(1, 1) model, the method of estimating parameters is the discrete equation and the method of sim-
ulating and forecasting is the continuous equation. The different forms of the discrete equation and the con-
tinuous equation determined could not equal accurately. So the skip from the discrete equation to the
continuous equation is just the problem which caused the error of simulating and forecasting, even based
on pure index sequence. DGM model is constructed both estimating parameters and simulating and forecast-
ing values with discrete equations. The results indicate that there is no error in simulating and forecasting
based on pure index sequence.
We analyzed the relationship of GM(1, 1) model and DGM model with MacLaurin formula. When the
value of a is less, b1  ea. Therefore, DGM model and GM(1, 1) model can be considered as the different
expressions of the same model. When the value of a is less, DGM model and GM(1, 1) model can substitute
each other.
According to the different iterative datum of DGM model, we proposed three forms of DGM model. Each
of the DGM models is not an optimized model. And we proposed three optimized DGM models by amending
the iterative datum. We give out the parameters formula and the recursive equations of these models. We
proof that DGM model and its optimized models perform better than GM(1, 1) model theoretically.

Acknowledgements

This work was supported by the National Natural Science Foundation of China under Grant 70473037,
Creative Organization and Scientific Research Foundation of Nanjing University of Aeronautics and Astro-
nautics under Grant Y0488-091.

References

[1] S.F. Liu, Y. Lin, Grey Information Theory and Practical Applications, Springer-Verlag, London, 2006.
[2] Z. Pawlak, Rough sets, Int. J. Inform. Comp. Sci. 11 (1982) 341–356.
[3] Z. Pawlak, J.W. Grzymala-Busse, R. Slowinski, Rough sets, Commun. ACM 38 (11) (1995) 89–95.
[4] L.A. Zadeh, Fuzzy sets, Inform. Control (8) (1965) 338–353.
[5] J.L. Deng, The Control problem of grey systems, Syst. Control Lett. 1 (5) (1982) 288–294.
[6] Y. Lin, S.F. Liu, A systemic analysis with data, Int. J. General Syst. 29 (6) (2000) 1001–1013.
[7] S.F. Liu, J. Forrest, The role and position of grey systems theory in science development, J. Grey Syst. 9 (4) (1997) 351–356.
[8] J.L. Deng, Introduction to grey system theory, J. Grey Syst. 1 (1) (1989) 1–24.
[9] J.L. Deng, The Basis of Grey Theory, Press of Huazhong University of Science & Technology, Wuhan, China, 2002.
[10] J.L. Deng, Grey Prediction and Grey Decision, Press of Huazhong University of Science & Technology, Wuhan, China, 2002.
[11] Y. Mu, An unbiased GM(1, 1) model with optimum grey derivative’s whitening values, Math. Pract. Theory 33 (3) (2003) 13–16 (in
Chinese).
[12] Y.N. Wang, K.D. Liu, GM(1, 1) modeling method of optimum the whiting values of grey derivative, Syst. Eng. Theory Pract. 21 (5)
(2001) 124–128.
[13] Z.M. Song, X.J. Tong, X.P. Xiao, Center approach grey GM(1, 1) model, Syst. Eng. Theory Pract. 21 (5) (2001) 110–113.
[14] G.J. Tan, The structure method and application of background value in grey system GM(1, 1) model, Syst. Eng. Theory Pract. 20 (4)
(2000) 99–103.
[15] B. Liu, S.F. Liu, Optimum time response sequence for GM(1, 1), Chinese J. Manage. Sci. 11 (4) (2003) 54–57.
[16] D. Luo, S.F. Liu, Y.G. Dang, The optimization of grey model GM(1, 1), Chinese Eng. Sci. 5 (8) (2003) 50–53.
[17] H. Zhang, S.G. Hu, Accurate solution for GM(1, 1) model, Syst. Eng.—Theory Methodol. Appl. 10 (1) (2001) 72–74.
[18] Y.-H. Lin, P.-C. Lee, Novel high-precision grey forecasting model, Automat. Constr. (2007).
[19] S.F. Liu, J.L. Deng, The range suitable for GM(1, 1), Syst. Eng. Theory Pract. 21 (5) (2000) 121–124.