Question

1. Kristen Pacheco owns a small restaurant that’s open seven days a week. Until recently, she forecasted the daily number of customers she would have using her intuition. However, she wanted to open another restaurant and recognized the need to adopt a more formal method of forecasting that could be used in both locations. Kristen decided to compare a three week moving average forecast with exponential smoothing forecasts using α = .7 and α = .3. She collected sales data for a month. The actual sales for the past three weeks are shown in the table below along with her forecast for last week.

1.       Using the data from Question 1 and this updated actual sales data, what is the mean average deviation for Kristen’s forecast when using a three-week moving average?

	a.	3.7
	b.	10.9
	c.	12.1
	d.	None of the above

	Customers Per Day
Week	Sun	Mon	Tue	Wed	Thu	Fri	Sat
Actual:
3 weeks ago	138	183	182	188	207	277	388
2 weeks ago	143	194	191	200	213	292	401
Last week	157	196	204	193	226	313	408
Forecast:
Last week	155	191	192	198	204	286	396

Answer 1

Question 1. Answer is option b, 146, 191, 192, 194, 215, 294, 399

Question 2 : Answer is option c, 156, 195, 200, 195, 219, 305, 404

Question 3 : Answer is option d, 156, 193, 196, 197, 211, 294, 400

M N O P Sun 3 months moving average is given by Ft = (D1 +D2 +D3)/3 Exponnetial smoothing = alpha(Last week demand) + ((1-alpha)*(last week forecast)) 3 weeks 2 weeks 1 week 3 weeks moving avg Mon 138 143 157 146 Tues 183 194 196 191 Wed Thurs Fri Sat 182 188 207 2771 191 200 213 292 204 193 226313 192 194 215 294 388 401 408 399 6 question 1 9 question 2 0.7 alpha=0.7 Sun forecast actual last week alpha=0.7, forecast Mon 155 157 156 Tue 191 196 195 Wed Thurs Fri 192 198 204 204 1 93 226 200 195 219 Sat 286 3 13 305 396 408 404 12 0.3 question 3 Sun alpha=0.3 forecast actual last week alpha=0.3, forecast Mon 155 1571 156 Tues Wed Thurs Fri Sat 191 192 198 204 2 86 196 204 193 226 313 193 196 197 211 294 396 408 400