Question

1) Data collected on the yearly demand for 50-pound bags of fertilizer at Wallace Garden Supply are shown in the following table

. YEAR DEMAND FOR FERTILIZER (1,000S OF BAGS)

1 4 2 6 3 4 4 5 5 10 6 8 7 7 8 9 9 12 10 14 11 15

a) Develop a 3-year moving averages model to forecast sales.

b) Develop a 3-year weighted moving averages model in which sales in the most recent year are given a weight of 2 and sales in the other 2 years are each given a weight of 1

. c) Use exponential smoothing with a smoothing constant of 0.3 to forecast the demand for fertilizer. Assume that last period’s forecast for year 1 is 5,000 bags to begin the procedure

. d) Develop a trend line model to forecast sales. You may use excel to find the intercept and slope coefficients of the trend line.

e) Which of the developed forecasts (3-year moving averages, weighted moving averages, exponential smoothing, and trend line) would you use based on each of MAD, MSE, MAPE, and bias? Explain your answer.

Answer 1