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Assignment - Forecasting

The business analyst wants to forecast DVD decoder demand using historical data from the past 5 years. Several forecasting techniques are analyzed: 1) Three-period moving average predicts 600 units 2) Three-year weighted moving average predicts 500 units 3) Exponential smoothing with alpha=0.4 predicts 525 units 4) Least squares trend line predicts 450 units Two water bottled forecasts are compared using error measures: F1 has lower MAD and MSE, making it more accurate. F2 has lower MAPE, making it more accurate. Coffee Palace manager analyzes mocha latte demand based on price. Simple linear regression forecasts 1,160 units at $1.80 price. The standard

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Vencint Laran
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339 views

Assignment - Forecasting

The business analyst wants to forecast DVD decoder demand using historical data from the past 5 years. Several forecasting techniques are analyzed: 1) Three-period moving average predicts 600 units 2) Three-year weighted moving average predicts 500 units 3) Exponential smoothing with alpha=0.4 predicts 525 units 4) Least squares trend line predicts 450 units Two water bottled forecasts are compared using error measures: F1 has lower MAD and MSE, making it more accurate. F2 has lower MAPE, making it more accurate. Coffee Palace manager analyzes mocha latte demand based on price. Simple linear regression forecasts 1,160 units at $1.80 price. The standard

Uploaded by

Vencint Laran
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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1. The business analyst for Video Sales, Inc.

c. wants to forecast this year's demand for DVD decoders based on


the following historical data:

Year Demand
5 years ago 900
4 years ago 700
3 years ago 600
2 years ago 500
Last year 300

a. What is the forecast for period 6, using a three-period moving average


b. What is the forecast for this year using a three-year weighted moving average with weights of .5, .3,
and .2?
c. What is the forecast for this year using exponential smoothing with alpha = .4, if the forecast for two
years ago was 750?
d. What is the forecast for this year using the least squares trend line for these data?

2. Two different forecasting techniques (F1 and F2) were used to forecast demand for cases of bottled
water. Actual demand and the two sets of forecasts are as follows:

Period and Demand Predicted Demand


Period Unit sold F1 F2
1 68 66 66
2 75 68 68
3 70 72 70
4 74 71 72
5 69 72 74
6 72 70 76
7 80 71 78
8 78 74 80

a. Compute MAD for each set of forecasts. Given your results, which forecast appears to be more
accurate? Explain.
b. Compute the MSE for each set of forecasts. Given your results, which forecast appears to be more
accurate?
c. Compute MAPE for each data set. Which forecast appears to be more accurate?

3. Coffee Palace’s manager, Brian Buckley, suspects that demand for mocha latte coffees depends on the
price being charged. Based on historical observations, Brian has gathered the following data, which shows
the numbers of these coffees sold over six different price values:

Price Number Sold


2.70 760
3.50 510
2.00 980
4.20 250
3.10 320
4.05 480

a. Using these data, how many mocha latte coffees would be forecast to be sold according to simple
linear regression if the price per cup were 1.80?
b. What is the standard error of estimate?
c. What is the coefficient of correlation and how do you interpret this result?

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