Question

# The monthly sales for Yazici Batteries, Inc., were as follows: MONTH SALES January 20 February 21...

The monthly sales for Yazici Batteries, Inc., were as follows:

MONTH SALES
January 20
February 21
March 15
April 14
May 13
June 16
July 17
August 18
September 20
October 20
November 21
December 23
1. Plot the monthly sales data.

2. Forecast January sales using each of the following:

1. Naive method.

2. A 3-month moving average.

3. A 6-month weighted average using .1, .1, .1, .2, .2, and .3, with the heaviest weights applied to the most recent months.

4. Exponential smoothing using an α = .3 and a September forecast of 18.

5. A trend projection.

3. With the data given, which method would allow you to forecast next March’s sales?

Please answer V. and C. at the bottom and show work Thank you

#### Homework Answers

Answer #1

b)

1) Naive method: It is the forecast method to have previous period actual value

Jan forecast = Dec actual = 23

2) 3 month moving average = Average (Oct+Nov+Dec) = (20+21+23)/3 = 21.33

3) Weighted average = Jul*0.1 + Aug*0.1 + Sep*0.1 + Oct*0.2 + Nov*0.2 + Dec*0.3 = 0.1*17 + 0.1*18 + 0.1*20 + 0.2*20 + 0.2*21 + 0.3*23 = 20.60

4) Exponential:

Forecast (t+1) = Forecast (t) + alpha*(Actual(t) - Forecast(t))

Oct = 18 + 0.3*(20-18) = 18.6

Nov = 18.6 + 0.3*(20-18.6) = 19.02

Dec = 19.02 + 0.3*(21-19.02) = 19.61

Jan = 19.61 + 0.3*(23-19.61) = 20.63

c) I will prefer to use exponential smoothing as it helps to factor in the demand fluctuation to give more realistic estimate and minimum error

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