JMJ MARIST BROTHERS
NOTRE DAME OF MARBEL UNIVERSITY
COLLEGE OF BUSINESS AND ADMINISTRATION
City of Koronadal 9506
South Cotabato, Philippines
Name: Cabarrubias, Rosario G. Course & Year: BSMA-2
Date: December 07, 2020
MODULE 6: FORECASTING
(EXERCISE PROBLEMS)
PROBLEM NO. 1 FORECASTING BASED ON AVERAGES
Period Number of Figure 1.1 Given information.
Complaints
1 60
a. Forecast for period 6 using the appropriate naive
2 65 approach.
Use the most recent value as the next
3 55 forecast which is 64.
b. Forecast for period 6 using three-period moving
4 58 average.
In getting the next forecast using the three-
period moving average, we must use the
5 64
values of the 3 most recent period which are
3,4 and 5.
Three-period moving average formula
:o
o
o 𝑀𝐴3 = 59
c. Forecast for period 6 using weighted average using weights of .50 for the
most recent, .30, and ,20.
The next forecast will be determined by multiplying the three (3) most
recent forecast on the given weights respectively.
Weighted average formula:
o F = 𝑃3(. 20) + 𝑃4(. 30) +
𝑃5(.50) o F = 55(.20) + 58(.30)
+ 64(.50)
o F = 60.4
d. Forecast for period 6 using exponential smoothing with a smoothing constant
of .40.
In order to get the forecast for the 6th period, we must start with
period 2, using the value from period 1 as the forecast for period 2 and
afterwards use the exponential smoothing including the smoothing
constant to get the remaining forecasts.
Period Number of Forecast Calculations
Complaints
1 60
2 65 60
3 55 62 60 + .40(65-60)
4 58 59.2 62 + .40(55-62)
5 64 58.72 59.2 +.40(58-59.2)
6 60.83 58.72 +.40(64-
58.72)
Figure 1.2 Forecast for period 6 using exponential smoothing approach.
PROBLEM NO. 3 LINEAR TREND LINE
Plot the data on a graph, and verify visually that a linear trend line is appropriate.
Develop a linear trend equation for the following data. Then use the equation to
predict the next two values of the series.
Period Demand
1 44
2 52
3 50
4 54
5 55
6 55
7 60
8 56
9 62
Period Demand ty Figure 3.1 Given information.
(t) (y) Figure 3.2 Linear trend line.
1 44 44 2
2 52 104 4
3 50 150 9
4 54 216 16
5 55 275 25
6 330 36
55
7 60 420 49
8 56 448 64
9 62 558 81
n=9
45 488 2545 285
∑
Figure 3.3
b= a= Forecast for period 10:
b= a= = 45.47 + 1.75
(10)
b= a = 54.22 – 1.75(5) = 45.47 + 17.5
b= a = 54.22 – 8.75
b = 1.75 a = 45.47 Forecast for period 11:
Z
Trend line equation: 𝐹11 ==45.47
64.72
+ 1.75 (11)
= a + bt 𝐹11 = 45.47 + 19.25
= 45.47 + 1.75t
ASSESMENT (PROBLEM SOLVING)
PROBLEM NO. 4
• An electrical contractor’s records during the last fives weeks indicate the
number of job requests:
Week Requests
1 20
2 22
3 18
4 21
5 22
Figure 4.1 Given information.
a. Forecast for week 6 using the naive approach.
• Use the most recent value as the next forecast which is 22.
• b. Forecast for week 6 using the four-period moving average.
• In getting the next forecast using the four-period moving average, we
must use the values of the 4 most recent week which are 2,3,4 and 5.
• Four-period moving average formula:
c. Forecast for week 6 using the exponential smoothing approach with α = .30.
• To get the forecast for period 6, we must start with week 2. Use the value
from week 1 as a forecast for week 2 and afterwards use the exponential
smoothing including the smoothing constant to get the remaining forecasts.
Figure 4.2 Forecast for week 6 using exponential smoothing approach.
Week Requests Forecast Calculations
1 20
2 22 20
3 18 20.6 20 + .30 (22-20)
4 21 19.82 20.6 + .30(18-20.6)
5 22 20.17 19.82 + .30(21-19.82)
6 20.72 20.17 + .30(22-20.17)
PROBLEM NO. 6
• From the following graph, determine the equation of the linear trend line for
timeshare sales for Glib Marketing, Inc.
Figure 6.1 Given information.
• The linear equation has a form of y = a + bt, where a is the value of y when
x = 0 and b is the slope of the line.
• Accordingly, a = 500 and b = (500-300) / (10-0) where b = 20 Equation of
the linear trend line:
o y = 500 - 20t
PROBLEM NO.26
• The following data were collected during a study of consumer buying
patterns:
Figure 26.1 Data collected.
Observation x y
s
1 15 74
2 25 80
3 40 84
4 32 81
5 51 96
6 47 95
7 30 83
8 18 78
9 14 70
10 15 72
11 22 85
12 24 88
13 33 90
a. Plot the data.
Figure 26.2 Plotted data.
b. Obtain a linear regression line for the data.
Figure 26.3
x y xy
1 74 111 225
5 0
2 80 200 625
5 0
4 84 336 160
0 0 0
3 81 259 102
2 2 4
5 96 489 260
1 6 1
4 95 446 220
7 5 9
3 83 249 900
0 0
1 78 14 324
8 04
1 70 980 196
4
1 72 10 225
5 80
n = 13 2 85 18 484
∑ 2 70
2 88 21 576
4 12
3 90 29 10
3 70 89
3 10 313 120
6 76 29 78
6
b a y = a + bx b
a y = 66.44 + 0.58x
b a
b a
b = 0.58 a = 66.44
c. What percentage of the variation is explained by the regression line? o
o 𝑟 = 0.869
o 𝑟2 = (0.869)2
o 𝑟2 = 0.755
The percentage of variation explained by the line is 𝑟2 = (0.869)2 = 0.755,
so 75.5% is explained by the line.
d. Use the equation determined in part b to predict the expected value of y
for x=41.
o y = 66.44 + 0.58x
o y = 66.44 +
0.58(41) o y =
66.44 + 23.78
o y = 90.22
