Forecasting
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Forecasting Exercises: 15 points Solve for the following: 1.
Weekly sales of copy paper at Cubicle Suppliers are in the table below. Forecast week 8 with a threeperiod moving average and with a four-period moving average. Compute MAD for each forecast. Which model is more accurate? Week 1 2 3 4 5 6 7
Sales (cases) 17 22 27 32 19 18 22
Use the table below: Week 1 2 3 4 5 6 7 8
Sales (cases) 17 21 27 31 19 17 21
3MA
|error|
4MA
|error|
MAD = Answer: Week 1 2 3 4 5 6 7 8
Sales (cases) 17 21 27 31 19 17 21
3MA
|error|
21.7 26.3 25.7 22.3 19.0
9.3 7.3 8.7 1.3
4MA
|error|
24.0 24.5 23.5 22.0
5.0 7.5 2.5
The four-week moving average is more accurate. The forecast with the 4-moving average is 22.0.
2.
The department manager using a combination of methods has forecast sales of toasters at a local department store. Calculate the MAD for the manager's forecast. Compare the manager's forecast against a naive forecast. Which is better? Month January February March April May June July August September October November December Month January February March April May June July August September October November December
Answer: Month January February March April May June July August September October November December
Unit Sales 52 61 73 79 66 51 47 44 30 55 74 125
Manager's Forecast
50 55 52 42 60 75
Actual Manager's Abs. Error 52 61 73 79 66 51 47 50 44 55 30 52 55 42 74 60 125 75 MAD
Actual Manager's Abs. Error 52 61 73 79 66 51 47 50 3 44 55 11 30 52 22 55 42 13 74 60 14 125 75 50
Naive Abs. Error
Naive Abs. Error
51 47 44 30 55 74
4 3 14 25 19 51
The manager's forecast has a MAD of 18.83, while the naive is 19.33. Therefore, the manager's forecast is slightly better than the naive.
3.
Favors Distribution Company purchases small imported trinkets in bulk, packages them, and sells them to retail stores. They are conducting an inventory control study of all their items. The following data are for one such item, which is not seasonal. a. Use trend projection to estimate the relationship between time and sales (state the equation). b. Calculate forecasts for the first four months of the next year.
Month Sales
1 Jan 51
2 Feb 55
3 Mar 54
4 Apr 57
5 May 50
6 Jun 68
7 Jul 66
8 Aug 59
9 Sep 67
10 Oct 69
11 Nov 75
12 Dec 73
Answer: The trend projection equation is Y = 48.32 + 2.105 T. The next four months are forecast to be 75.68, 77.79, 79.89, and 82.00.
Weekly sales of copy paper at Cubicle Suppliers are in the table below. Forecast week 8 with a threeperiod moving average and with a four-period moving average. Compute MAD for each forecast. Which model is more accurate? Week 1 2 3 4 5 6 7
Sales (cases) 17 22 27 32 19 18 22
Use the table below: Week 1 2 3 4 5 6 7 8
Sales (cases) 17 21 27 31 19 17 21
3MA
|error|
4MA
|error|
MAD = Answer: Week 1 2 3 4 5 6 7 8
Sales (cases) 17 21 27 31 19 17 21
3MA
|error|
21.7 26.3 25.7 22.3 19.0
9.3 7.3 8.7 1.3
4MA
|error|
24.0 24.5 23.5 22.0
5.0 7.5 2.5
The four-week moving average is more accurate. The forecast with the 4-moving average is 22.0.
2.
The department manager using a combination of methods has forecast sales of toasters at a local department store. Calculate the MAD for the manager's forecast. Compare the manager's forecast against a naive forecast. Which is better? Month January February March April May June July August September October November December Month January February March April May June July August September October November December
Answer: Month January February March April May June July August September October November December
Unit Sales 52 61 73 79 66 51 47 44 30 55 74 125
Manager's Forecast
50 55 52 42 60 75
Actual Manager's Abs. Error 52 61 73 79 66 51 47 50 44 55 30 52 55 42 74 60 125 75 MAD
Actual Manager's Abs. Error 52 61 73 79 66 51 47 50 3 44 55 11 30 52 22 55 42 13 74 60 14 125 75 50
Naive Abs. Error
Naive Abs. Error
51 47 44 30 55 74
4 3 14 25 19 51
The manager's forecast has a MAD of 18.83, while the naive is 19.33. Therefore, the manager's forecast is slightly better than the naive.
3.
Favors Distribution Company purchases small imported trinkets in bulk, packages them, and sells them to retail stores. They are conducting an inventory control study of all their items. The following data are for one such item, which is not seasonal. a. Use trend projection to estimate the relationship between time and sales (state the equation). b. Calculate forecasts for the first four months of the next year.
Month Sales
1 Jan 51
2 Feb 55
3 Mar 54
4 Apr 57
5 May 50
6 Jun 68
7 Jul 66
8 Aug 59
9 Sep 67
10 Oct 69
11 Nov 75
12 Dec 73
Answer: The trend projection equation is Y = 48.32 + 2.105 T. The next four months are forecast to be 75.68, 77.79, 79.89, and 82.00.
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