Question

The CEO requested forecasts based on the given historical data.  Put your final answers in the table.

Round answers to 3 decimals for each method. Show work for full credit.

Period	Actual Demand	3 Month Moving Average	Moving Average Tracking Signal	3 Month Weighted Average	Weighted Average Tracking Signal
1	62	X	X	X	X
2	59	X	X	X	X
3	48	X	X	X	X
4	57	56.33		59.4
5	60	54.66		54.4
6	56	55		52.83
	MAD		X		X
	MAPE		X		X

1. (10 pts) Calculate simple three-month moving average forecast for periods 4-6.

2. (10 pts) Calculate weighted three-month moving average forecast for periods 4-6. The weights are .5 for t-1, .4 for t-2. and .1 for t-3.

3. (15 pts) Calculate the mean absolute deviation – MAD, mean absolute percent error – MAPE, and tracking signal for each of the methods above.

The CEO requested forecasts based on the given historical data.  Put your final answers in the table.

Round answers to 3 decimals for each method. Show work for full credit.

Period	Actual Demand	Single Exponential Smoothing	Single Exponential Tracking Signal	Exponential Smoothing with Trend	Smoothing with Trend Tracking Signal
1	62	60		60
2	59
3	48
4	57
5	60
6	56
	MAD		X		X
	MAPE		X		X

4. (25 pts) Calculate single exponential smoothing forecast for periods 2-6. The initial forecast (F₁) is 60 and an α (alpha) .40.

5. (25 pts) Calculate exponential smoothing with trend forecast for periods 2-6.

The initial forecast with trend(F₁)  of 59, and trend (T₁) of  1, FIT₁= 60, α (alpha) .40 and ? (delta) of .30.

6. (15 pts) Calculate the mean absolute deviation – MAD, mean absolute percent error – MAPE, and tracking signal for each of the methods above.

Answer 1

10. Using 3 period Moving Average Forecast method, the forecast would be:

F(6) = {Actual(3) + Actual(4) + Actual(5)}/3

= (52 + 80 + 79)/3

= 70.33

Using the Last Value forecast method, the forecast would be:

F(6) = Actual(5)

= 79

11. Using the exponential smoothing, the forecast would be:

F(4 Years Ago) = 0.8*Actual(5 Years Ago) + (1-0.8)*F(5 Years Ago)

= 0.8*1270 + 0.2*1200

= 1256

F(3 Years Ago) = 0.8*1060 + 0.2*1256

= 1099.2

F(2 Years Ago) = 0.8*1500 + 0.2*1099.2

= 1419.84

F(Last Year) = 0.8*1100 + 0.2*1419.84

= 1163.968

F(Next Year) = 0.8*1030 + 0.2*1163.968

= 1057 Approximately