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6.4 Activity 2

The document summarizes the use of four quantitative forecasting methods - naive method, three-period moving average, three-period weighted moving average, and average arithmetic of growth rate method - to forecast demand over seven periods based on observed demand data. For each method, the document shows the calculations to obtain the forecasts for each period.

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Israfel Cariaga
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99 views2 pages

6.4 Activity 2

The document summarizes the use of four quantitative forecasting methods - naive method, three-period moving average, three-period weighted moving average, and average arithmetic of growth rate method - to forecast demand over seven periods based on observed demand data. For each method, the document shows the calculations to obtain the forecasts for each period.

Uploaded by

Israfel Cariaga
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CARIAGA, Israfel T.

(BS-ENTREP)
ACTIVITY 2 FOR FINALS
INSTRUCTIONS:  Use quantitative forecast methods for the data shown below. Show complete
solutions.

Period 1 2 3 4 5 6 7

Observation 24 34 36 37 41 44 45

 
Compute for:

1. Naive method
2. Three-period moving average
3. Three -period Weighted Moving Average
4. Average Arithmetic of growth rate Method

1. NAIVE METHOD

Period Demand Forecast


1 24
2 34 24
3 36 34
4 37 36
5 41 37
6 44 41
7 45 44

2. THREE-PERIOD MOVING AVERAGE

Period Actual Demand Forecast


1 24
2 34
3 36
4 37
5 41 (24+34+36+37) ÷4= 32.75
6 44 (34+36+37+41) ÷4= 37
7 45 (36+37+41+44) ÷4= 39.5

3. THREE-PERIOD WEIGHTED MOVING AVERAGE


Period Demand Forecast
1 24
2 34
3 36
4 37 [(36x3) +(34x2) +(24x1) ÷6= 33.33
5 41 [(37x3) +(36x2) +(34x1) ÷6= 36.17
6 44 [(41x3) +(37x2) +(36x1) ÷6= 38.83
7 45 [(44x3) +(41x2) +(37x1) ÷6= 41.83

4. AVERAGE ARITHMETIC OF GROWTH RATE METHOD

Year Sales in Million % growth rate


1 24
2 34 [(34-24) ÷24] x100 = 41.67
3 36 [(36-34) ÷34] x100 = 5.88
4 37 [(37-36) ÷36] x100 = 2.78
5 41 [(41-37) ÷37] x100 = 10.81
6 44 [(44-41) ÷41] x100 = 7.32
7 45 [(45-44) ÷44] x100 = 2.27
∑%growth rate= 70.73

Average growth rate=∑%growth rate÷


number of periods covered= 70.73 ÷ 6
Average growth rate= 11.79%

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