Question

tioners? Refer to Problems 5-22, 5-25, and 5-26. 8 Sales of industrial vacuum cleaners at R. Lowenthal Supply Co. over the past 13 months are as follows: SALES SALES ($1,000s) MONTH ($1,000s) MONTH 11 January 14 August 14 February September 17 16 March 12 October 10 14 November April December 15 Мay 16 January 17 June 11 July 11 (a) Using a moving average with three periods, de- termine the demand for vacuum cleaners for next February (b) Using a weighted moving average with three pe- riods, determine the demand for vacuum cleaners for February. Use 3, 2, and 1 for the weights of the most recent, second most recent, and third most recent periods, respectively. For example, if you were forecasting the demand for February, November would have a weight of 1, December would have a weight of 2, and January would have a weight of 3. (c) Evaluate the accuracy of each of these methods. (d) What other factors might R. Lowenthal consider in forecasting sales? 5-29 Passenger miles flown on Northeast Airlines, a com-

Answer 1

SOLUTION:

a &b) As three-period average forecasting method is applied thus the forecasts start for period 4

Period	Month	Demand	Average	Weighted Average
4	April	10	13.67	14.5
5	May	15	13.33	12.67
6	June	17	13.67	13.5
7	July	11	14	15.17
8	August	14	14.33	13.67
9	September	17	14	13.50
10	October	12	14	15
11	November	14	14.33	14
12	December	16	14.33	13.83
13	January	11	14	14.67
14	February		13.67	13.17

　

c) MAD for moving average equals 2.2.

MAD for weighted average equals 2.72.

The forecast of moving average for the m/o February equals 13.67.

The forecast of weighted moving for the m/o February equals 13.17

As per the above abalysis, the moving average appears is more accurate. Therefore forecast for the m/o February is nearly14

d) There are numerous factors for consideration which includes seasonality and any underlying causal variables such as the budget on advertising.