Question

Question 1:

Wendy's Happy Homes Inc. manufactures Home Appliances. Monthly sales of Wendy's Washers and Dryer Sets for a nine-month period were as follows:

MONTH	Washer and Dryer Sales
January	490
February	480
March	450
April	500
May	480
June	470
July	490
August	520
September	530

Forecast October sales using:

1) A four-month moving average

2) a six-month moving average

3. Compute the MAD for each forecast method you used.

Actual October sales were 520 units.

4) Which method was the most accurate?

5) Forecast November and December using the method you believe to be the most accurate.

Question 2:

Refer to the gasoline sales time series data in Table below to answer the following (Copy the file to Excel when done submit here)

1. Compute Three- week, four-week and five-week moving averages for the time series.

2. Compute the MSE for Three- week, the four-week and five-week moving average forecasts. (Look over the PowerPoint)

3. Create a new column to show the trend line (y= mx+b) for the table below

4. What appears to be the best number of weeks of past data (three, four, or five) to use in the moving average computation?

5. Plot gasoline sales time series after obtaining the contract with the Vermont state police

6. Plot gasoline sales time series and three-week moving average Forecasts

7. Plot gasoline sales time series and add the trend line to graph

GASOLINE SALES TIME SERIES AFTER OBTAINING THE CONTRACT WITH THE VERMONT STATE POLICE

Week	Sale (1000s of Gallons)
1	17
2	21
3	19
4	23
5	18
6	16
7	20
8	18
9	22
10	20
11	15
12	22
13	31
14	34
15	31
16	33
17	28
18	32
19	30
20	29
22	34
21	33

Answer 1

Question 1.

Moving average is method in time series to know the trend of the data. A moving average is defined as an average of fixed number of items in the time series which move through the series by dropping the top items of the previous averaged group and adding the next in each successive average. The answer of question 1) and 2) is given in table

		1)	2)	3)
MONTH	Washer and Dryer Sales	4-month moving average	6-month moving average	Absolute deviation for 4 month MA	Absolute deviation for 6 month MA
January	490
February	480
March	450
April	500
May	480	480		0
June	470	477.5		7.5
July	490	475	478.3333	15	11.6667
August	520	485	478.3333	35	41.6667
September	530	490	485	40	45
Forecast October		502.5	498.3333

3) Sum of Absolute Deviation from 4 month moving average is = 97.5

MAD = 97.5/5 =19.5

Sum of Absolute Deviation from 6 month moving average is = 98.33

MAD = 98.33/3 = 32.77

4) Hence, the 4-month moving average has the lowest MAD. So, it is the best forecast method among 6 month moving average.

5) If Actual October sales were 520 units, then Forecast November and December using the 4-month moving average method is 515 and 521.25.