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Demand Forecasting: April March May April

The document discusses demand forecasting techniques for an organization. It provides actual demand data for January through March and calculates forecasts for April and May using various techniques, including naïve forecasting, simple and weighted moving averages, exponential smoothing, and linear regression. Accuracy is evaluated using measures like mean absolute deviation (MAD), root mean squared forecast error (RSFE), and tracking signal (TS).

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abhijeet
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36 views2 pages

Demand Forecasting: April March May April

The document discusses demand forecasting techniques for an organization. It provides actual demand data for January through March and calculates forecasts for April and May using various techniques, including naïve forecasting, simple and weighted moving averages, exponential smoothing, and linear regression. Accuracy is evaluated using measures like mean absolute deviation (MAD), root mean squared forecast error (RSFE), and tracking signal (TS).

Uploaded by

abhijeet
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Demand Forecasting

1. An organization is in the process of setting up a forecasting system for better planning of its
activities. The data on actual demand for their product in the last few months are as shown in
table.

Month Demand
January 779
February 802
March 818

i). Calculate forecast for April using the following techniques: a). Naïve approach b). 3 months
moving average
Naïve approach:
FApril = AMarch Similarly, AMay=AApril
3 months moving average:
FApril = (AJan+AFeb+AMarch)/3 Similarly FMay= (AFeb+AMarch+AApril)/3
ii.) Calculate the 5 months moving average if actual sales in April and May were 898 and 902
respectively.
FJune= (AJan+AFeb+AMarch+AApril+AMay))/5, AJuly=(AFeb+…….+AJune)/5

(In general, n month moving average,

iii). Taking weights 0.2, 0.3 and 0.5, calculate the forecast for April and May using 3 months
weighted moving average method.
FApril = (w1*AJan+ w2*AFeb+ w3*AMarch)/Σw

(Give highest weight to most recent data and lowest


weight to oldest data)
iv). Taking smoothing constants of 0.3, 0.5 and 0.7 (α=0.3, α=0.5 and α=0.7), calculate the
forecast for April using exponential smoothing method. (Take 3 months moving average as
the forecast).
FApril = FMarch + α (AMarch-FMarch) or FApril = (1- α) FMarch + α AMarch
v). Calculate the forecast for April using linear regression/linear trend projection.
Ft = a + bt (ie., y=a+bx)

vi). Calculate MAD, RSFE and tracking signal (TS) to calculate the accuracy of the forecast.

RSFE=Σ (Actual sales-Forecasted sales)

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