Question

Exhibit 2. The past demand data shown below can be regarded as having a horizontal pattern.

Month	Demand
January	40
February	45
March	50
April	37

1.     Refer to Exhibit 2. What is the forecast for May found by the three-month moving average method?

a.	45
b.	50
c.	37
d.	44

ANS:D (45+50+37)/3

     2.   Refer to Exhibit 2. What is the error of the forecast for April found by the three-month moving average method?

a.	0
b.	-8
c.	8
d.	-5

ANS:B

     3.   Refer to Exhibit 2. What is the forecast for March found by the exponential smoothing method with a smoothing constant of 0.2?

a.	50.0
b.	40.0
c.	41.0
d.	42.8

ANS:C

                                     

     4.   Refer to Exhibit 2. What is the absolute percentage error of the forecast for March found by the exponential smoothing method with a smoothing constant of 0.2?

a.	-18%
b.	18%
c.	-9%
d.	2%

ANS:B

((Explain the answers))

Answer 1

Month	Demand
January	40
February	45
March	50
April	37

1. Three month movie average is found by finding the average of three value before that month

So Forecast of may = (45+50+37)/3 = 44

Answer D.

2. Forecast of March = (40+ 45 +50)/3 = 45

Error=  Demand- forecast = 37- 45 = -8

Answer B.

3. Exponential smoothing formula:

where, F_t is the forecast value and A_t is actual value or demand. And =0.2

Month	Demand	Exponential Smoothing
Jan	40	40(Assume equal to actual value)
Feb	45	= 40+ 0.2(40-40) = 40
March	50	= 40 +0.2(45-40) = 41
April	37	= 41 + 0.2(50-41) = 42.8

Forecast for may using exponential smoothing = 41

Answer C

4.

_{Answer B}

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