Question

answer 1-3 please don't copy from previous post. good luck

Problems #3, 5, 7

1. (P3) The owner of the Chocolate Outlet Store wants to forecast chocolate demand. Demand for the preceding four years is shown in the following table:

Year	Demand (Pounds)
1	68,800
2	71,000
3	75,500
4	71,200

Forecast demand for Year 5 using the following approaches: (1) a three-year moving average; (2) a three-year weighted moving average using .40 for Year 4, .20 for Year 3, and .40 for Year 2; (3) exponential smoothing with α = .30, and assuming the forecast for Year 1 = 68,000.

2. (P5) The forecasts generated by three forecasting methods and actual demand for the Torrance Company are as follows:

Month        Demand        Forecast 1        Forecast 2      Forecast 3

1                 269                 275                   268                  280

2                 289                 266                   287                  295

3                 294                 290                   292                  290

4                 278                 284                   298                  280

5                 268                 270                   274                  270

6                 269                 268                   270                  260

Compute the MSE and MAD for each forecasting method. Which method is better? Would your decision on which forecasting method performs better depending on which forecasting accuracy measure (MAD or MSE) is selected?

3. (P7) The Sun Devils Corporation is deciding which of two forecasting models to use. The forecasts for the 2 models and actual demand are provided below:

                               Model 1          Model 2

Month Sales         Forecast         Forecast

1           170                  175                  172

2           190                  165                  185

3           195                  190                  190

4           180                  185                  195

5           170                  170                  175

6           170                  165                  170

7           160                  160                  165

8           175                  170                  175

9           180                  185                  180

10         175                  170                  175

Compute the MAPE and RSFE for the two forecasting methods. Is RSFE a good forecasting accuracy measure?

Answer 1

Problem 3.

Forecast Year 5 - 3 Year moving average = (71000 + 75500 + 71200) / 3= 72566.67

Forecast Year 5 - 3 Year weighted moving average = (0.4* 71000 + 0.2*75500 + 0.4*71200) =71980

Exponential smoothing formula = Actual demand of previous year + Alpha (0.3) * (Actial demand of previous year - Forecast of previous year)

Forecast year 5 = 71200 + 0.3 * (71200 - 70997.6) = 71058.32

Year	Demand (Pounds)	Forecast
1	68,800	68000
2	71,000	68240
3	75,500	69068
4	71,200	70997.6
5		71058.32

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