Question

Question 13 (15 points) Consider the following data concerning the performance of a forecasting method. 200 280 Month November December January February March Actual demand 300 270 250 310 Forecast 270 260 270 250 a. Forecast the demand for the month of April using three month moving average method. (5 points) b. Forecast the demand for the month of April using weighted moving average method. Weights for last three months (t-1, -2, and t-3) are 0.5, 0.3, and 0.2 respectively. (5 points) c. If the Actual demand for Aprilis 290, calculate the forecast errors for 3 month moving average method and weighed moving average method. (5 points) d. Which method would you choose? Explain why. [5 points - extra credit]

Answer 1

solutione Given data, Data concerning the performance of a forecasting methods November ( nogensen January Febrauny / march Month -Actual demand / 300 1200 1 270 1 950 | 310 - forecast 270 12.so I 2.60 270 | 250 - teret-- cas Cakulating forecast using three month moving average method & Forecast Capsil) & Jant Febt march 270 + 250310 2.877 (approx) (B) Calculating Fore.cast using weighted average method o Fese cast aprill 3 Janxo.s + febx0.3*Manchxo-2 E 270X0.5 & 500-3+ 310002- = 284 approx)

(c) The actual demand for april is 29o. * Error in three months moving average methods 271-290 =-13 ( understated) * Error in weighted average methods = 284-290 2-6 (understated) (D) well choose "weighted average method". It gives a forecast which is more coherent by adding suitable weight to previous actual values.