Question

As Operations Manager for the same medical device manufacturer you have fresh order data for a hip replacement assembly called HIP 2. Based on the order data below, choose the best possible forecast method:

              Week                            HIP 2

1	23
2	21
3	25
4	33
5	27
6	28
7	28
8	36
9	30
10	31
11	30
12	40
13	33
14	34

	A.	Linear Trend
	B.	Moving Average
	C.	Exponential Smoothing
	D.	Weighted Moving Average

Answer 1

Here, we can approach the problem in two way . One is to solving it by all this method and compare the error term to get the best fit. Another, way to deal is to go conceptually and find out the best solution.

Here, we can see that latest months have higher value compare to past months. In this case we need to give more weightage to latest months . So, best solution for this data is Exponential smoothing.

Linear trend or moving average will not give good solution as this data have seasonality issue.

So , right answer is Exponential smoothing.