Question

2. The historical demand for a product is below. Please forecast the demand in April. Month Sales (a) Use a 3-month simple moving average. 1 (January) 33 (b) Use a 3-month weighted moving average with weights of 0.6, 0.3, and 0.1. 2 (February) 36 © Use exponential smoothing with a = 0.8 and a March forecast = 37. 3 (March) 39 (d) Find trend line y=a+bx, and then forecast demand. (3 points)

Answer 1

Forecast in demand for april to be caluated as:

(a) using three month simple moving average

Demand for April = (33+36+39)/3 = 36

(b) using weighted moving average

Demand for April= 0.6×33+0.3×36+0.7×39 = 34.5

(c) using exponential smoothing

a=0.8, Forecast for march(F3)= 37, Actual for March(A3)= 39

Demand for April can be calculated using below formula (F4)=

a×A3+ (1-a)×F3

0.8×39+0.2×37 = 38.6

(d) using trend line y= a+bx

y represents sales to be calculated

x represents time (1,2,3)

First we need to calculate a and b for calculating demand

From the attached image above, a= 30 and b = 3

By putting this in equation, y=a+bx

We can forecast demand for the month of april.

X stands for number of month which is 4 for april and Y stands for forecasted demand.

Y=a+bx

Y= 30+3×4= 42

Demand for April= 42.