Question

Examples 1,2,3

Time Series Forecasting Models The Mean One of the simplest forecasting models is the mean, where the forecast is made by simply taking an average of all the data: ΣD, F1+1 = [D,+D=1+ +D-n] F1+1 = n n where F1+1 = forecast of demand for next period, t+1 D. = demand for current period, t n= number of data points This method is only appropriate for a level data pattern. It is, however, a reasonable forecasting model to use for forecasting stable and mature products. One advantage of this method is that as more data is collected over time, and the average becomes based on a larger data set, the forecasts become more stable. Example 1 Forecasting with the Mean Handy Power Tools is forecasting sales of its most popular drill. The company has been selling the drill for the past 15 years, and sales have been steady. The company uses a simple mean to forecast weekly sales. Sales over the past five weeks are available, and the company will use them to make a forecast for week six.

1. Beyond Tea Inc. wants to forecast sales of its menthol green tea. The company is considering either using a simple mean or a three-period moving average to forecast monthly sales. Given sales data for the past 10 months use both forecasting methods to forecast periods 7 to 10 and then evaluate each. Which method should they use? Use the selected method to make a forecast for month 11. (Show all calculations .... Please read Examples1, 2, 3 and the paragraphs beneath them (the materials before Trend Adjusted Exponential Smoothing) before answering these two questions.)

5. Green Water Park uses exponential smoothing to forecast monthly visits of customers. Its forecast for June was 1 million, but the actual number of customers turned out to be 2 million. The forecaster decided to use an alpha of 0.8.What is the forecast for July?

Please show ALL of your calculations and explain the question in great detail. Thank you!

Answer 1

Answer 1=

Forecast for Mean=

Month Sales Forecast Forecast 1 5 2 Слоо 3 4 18 5 6 7 20 19 17 (5+8+15+18+20+19)/6 18 (5+8+15+18+20+19+17)/7 19 (5+8+15+18+20+19+17+18)/8 21 (5+8+15+18+20+19+17+18+19)/9 8 14.16667 14.57143 15 9 10 15.44

Forecast for 3-month moving average=

Month Sales Forecast Forecast 1 5 2 3 15 4 18 5 6 7 19 20 19 17 (18+20+19)/3 18 (20+19+17)/3 19 (19+17+18)/3 21 (17+18+19)/3 8 18.67 9 18 10 18

The results shows that the forecasts obtained from 3-month moving average is accurate that that of mean method so we will chose the 3-mont moving average.

Forecast for month 11 using 3 month moving average = (18+19+21)/3=19.33

Answer 5= Forecast for July = F_t-1+ $\alpha$ *(A_t-1-F_t-1)=2+0.8*(1-2) =1.2

so the forecast for the month of July =1.2 million