Question

Historical demand for a product is as follows:

	DEMAND
April	58
May	54
June	74
July	58
August	76
September	73

a.	Using a simple four-month moving average, calculate a forecast for October. (Round your answer to 2 decimal places.)

Forecast for October

b.	Using single exponential smoothing with ? = 0.10 and a September forecast = 61, calculate a forecast for October. (Round your answer to 2 decimal places.)

Forecast for October

c.	Using simple linear regression, calculate the trend line for the historical data. Say the X axis is April = 1, May = 2, and so on, while the Y axis is demand. (Round your intercept value to the nearest whole number and slope value to 2 decimal places.)

  Y =  +  t

d.	Calculate a forecast for October using your regression formula. (Round your answer to 2 decimal places.)

Forecast for October

Answer 1

a)

Four period moving average is the average of previous 4 period actual data

Forecast for October = (73+76+58+74)/3 = 281/4 = 70.25

Forecast for October = 70.25

b)

Exponential smoothing F_t

F_t = new forecast

F_t-1 = previous period forecast

A_t-1 = Previous period actual demand

Forecast fot October = 61+0.1*(73-61) = 62.2

Forecast fot October = 62.2

c)

Linear trend y = a+bx

a = intercept

b = slope

x = time period

y = forecast for demand for period x

n = no of peiods

= the mean of the x values

= the mean of the y values

Slope b = (1438-(6*65.5*3.5))/(91-(6*3.5*3.5)) = 62.5/17.5 = 3.57

Intercept a = 65.5 - (3.57*3.5) = 53

Y = 53 + 3.57x or Y = 53+3.57t

d)  Forecast for October (x= 7) Y = 53+3.57*7 = 77.99