Month Sales
January $250,000
February $200,000
March $300,000
April $350,000
May $450,000
Month |
Sales |
Forecast 1 |
Forecast 2 |
Jan |
35 |
30 |
33 |
Feb |
29 |
28 |
32 |
Mar |
39 |
43 |
35 |
Apr |
42 |
40 |
45 |
May |
51 |
48 |
52 |
Jun |
56 |
55 |
52 |
Which is the better forecasting model, based on the MAD criterion?
Month |
Sales |
Jan |
35 |
Feb |
29 |
Mar |
39 |
Apr |
42 |
May |
51 |
Jun |
56 |
Forecast sales for July using an exponential smoothing model with a smoothing constant of 0.40. Assume that the forecast for May was 36.25.
Qs 1)
a) A two period moving average method averages the actual value for the previous two periods to generate the forecast for the next period. This can be calculated as the sum of the actual value for the previous two periods/2
So using the above formula, expected sales for June = (350000+450000) / 2 = 800000/2 = 400000
b) A three period moving average method averages the actual value for the previous three periods to generate the forecast for the next period. This can be calculated as the sum of the actual value for the previous three periods/3
So using the above formula, expected sales for June = (300000+350000+450000) /3 = 1100000/3 = 366666.67
Use the following sales data to answer the questions. Month Sales January 
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