Question

Problems (not on scantron-show your work) 1. (12 points) Given the following sales for the past 5 months, determine a forecast for Sept using the following methods. Apr May June luly Aug 320 370 400 440 490 3 period moving average We. Moving Average (wts. 3, 1,1 Exp. Smoothing (a 0.4, Fau 394.4 Trend Adjusted Forecast (a-04, β-ol), use the first four periods to start this forecast (start in July. TAF 440.0) Linear Trend (a-281, b41, Apr is period 1) Which forecast do you think is best and why? Summarize your answers below Extra credit for forecasting for Oct Mov Ave Wt. Mov Ave Exp Sm Trend Adi Linear Trend Oct

Answer 1

Answer in image

Explanation

Absolute deviation= |Forecast - Sales|

MAD= mean absolute deviation= sum of absolute deviation/no. of periods

the formula to be used in Exponential smoothing is

F_t+1= alpha*A_t + (1-alpha) F_t

A_t means Actual demand of t'th month, if you want to find out the Forecast through exponential smoothing= forecast of 3rd month = alpha*actual demand of 2nd month+(1-alpha) *forecast demand of 2nd month

remember forecast of 1st month is 394.4, demand for Sept is taken as 378

Weighted forecast of a month = 0.3*(sales of most recent month) +0.1*(sales of next most recent month) +0.1(sales of third recent month)/0.5

Forecast of a month with three period moving average = (sales of most recent month+ sales of next most recent month+ sales of third recent month)/3