Question

FC.62 Mitchell's Mills is a startup looking to break into the preparedness market with a revolutionary new wheat grinder called the WG1. Since Mitchell's is a new company they do not have any historical data for sales of its flagship product, but they estimate they will be able to sell 505 in the month of April. The table below contains actual sales data for April and each of the succeeding five months (through September): Month Forecast WG1s Sold 467 1 Apr 505 May Jun 424 391 430 Jul Aug Sep 466 379 Suppose it was the beginning of May and you were asked to develop a forecast for the month of May. Your only actual sales data was for the month of April. Because of this paucity of data you decide to use the exponential smoothing method for the construction of your forecasting model. You determine that an alpha value of 0.8 would be appropriate. Based on the above information, what would have been your forecast for the month of May? (Display your answer to two decimal places.) Number If you follow this same forecasting process through all the months, continuing with June and going through September, what would be the forecast in the month of September? (Display your answer to two decimal places.) Number What is the MAD for this forecast (based on six months of forecasts-April through September)? (Display your answer to two decimal places.) Number What is the MAPE for this forecast (based on six months of forecasts-April through September)? (Write your answer as a percentage, and display your answer to two decimal places.)

Answer 1

forecasting problem: lerror]% months WG1s gold forecast error ES a=0.8. April 467 505.00 -38.00 May 424 474.60 -50.60 june 391 434.12 -43.12 July 430 399.62 30.38 August 466 423.92 42.08 September 379 457.58 -78.58 total -137.85 absolute error 2 error 38.00 1444 50.60 2560.36 43.12 1859.334 30.38 922.7014 42.08 1770.322 78.58 6174.816 282.75 14731.53 8.14 11.93 11.03 7.06 9.03 20.73 67.93 formula for calculating the forecast using exponential smoothing with a=0.8 Ft = a* At-1 + (1-a) Ft-1 Ft = 0.8 * At-1 + (1-0.8) Ft-1 Ft = 0.8 * At-1 + 0.2 * Ft-1 474.60 for the month may: (0.8+467)+(0.2*505)= (likewise, calculate for other months). calculation of MAD, MAPE, and MSE * MAD mean absolute deviation (282.75/6) * MAPE mean absolute percentage error (67.93/6) * MSE mean squared error (14731.53/6) 47.13 11.32 2455.26

Answers:

Forecast for month of May = 474.60

Forecast for September = 457.58

MAD = 47.13

MAPE = 11.32

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