Question

Busy Bee Distilleries is producing a new whiskey for launch on the Labour Day weekend. When the company has launched other products in the past, actual sales have been as follows:

Month	Actual Sales (bottles)
1	5,500
2	6,200
3	7,150
4	8,000
5	9,300
6	10,000

a) Using the 3-month Moving Average method, calculate sales forecasts for months 4, 5 & 6.
b) Using the Exponential Smoothing method, calculate sales forecasts for months 4, 5 & 6; let α = 0.5 and a forecast of 5,000 for the first month.
c) Using data from the first three months, determine the linear trend equation and calculate sales forecasts for months 4, 5 & 6.
d) Using the Trend Adjusted Exponential Smoothing model, calculate sales forecasts for months 4, 5 & 6; let α = 0.5 and β = 0.8 (start with initial estimates for month 1 of S1 = 5,200 and T1 = 800).
e) Calculate MSE for each of the forecasting techniques above, stating any necessary assumptions. Based on MSE, what is the preferred method?
f) Using the preferred method from e) above, what is the forecast for month 7?

Answer 1

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