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Approaches To Forecasting

The document discusses different forecasting techniques: exponential smoothing, moving average, and time series regression. It provides examples of each with sample data and calculations of measures like mean absolute deviation (MAD), mean squared error (MSE), and mean absolute percentage error (MAPE). Exponential smoothing is performed with an alpha of 0.1, moving average uses a 3-month window, and time series regression finds the intercept, slope, and forecasting equation to predict future demand.

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Eliza Jayne Princess Vizconde
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40 views3 pages

Approaches To Forecasting

The document discusses different forecasting techniques: exponential smoothing, moving average, and time series regression. It provides examples of each with sample data and calculations of measures like mean absolute deviation (MAD), mean squared error (MSE), and mean absolute percentage error (MAPE). Exponential smoothing is performed with an alpha of 0.1, moving average uses a 3-month window, and time series regression finds the intercept, slope, and forecasting equation to predict future demand.

Uploaded by

Eliza Jayne Princess Vizconde
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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YOPMAN - PRODUCTION AND OPERATIONS MANAGEMENT (WITH LABORATORY)

Approaches to Forecasting
I. Forecasting Exponential Smoothing
Sample Problem:

Perform exponential smoothing technique with alpha = 0.10, and compute for MAD, MSE, and MAPE

Period Demand Forecast Absolute Error Error2 (Absolute Error / AD)*100


January 300
February 356
March 387
April 381
May 347
June 352
July
Total
MAD
MSE
MAPE

Answer:

Period Demand Forecast Absolute Error Error2 (Absolute Error / AD)*100


January 300
February 356 300 56 3,136 15.73%
March 387 305.60 81.40 6,625.96 21.03%
April 381 313.74 67.26 4,523.91 17.65%
May 347 320.47 26.53 703.84 7.65%
June 352 323.12 28.88 834.05 8.20%
July 326.01
Total
MAD 52.01
MSE 3,164.75
MAPE 14.05

Solution:

P a g e 1|3
Jay]
YOPMAN - PRODUCTION AND OPERATIONS MANAGEMENT (WITH LABORATORY)
Approaches to Forecasting
II. Moving Average
Problem:

Perform a 3-month moving average technique, compute for MAD, MSE, and MAPE

Period Demand Forecast Absolute Error Error2 (Absolute Error / AD)*100


January 300
February 356
March 387
April 381
May 347
June 352
July
Total
MAD
MSE
MAPE

Answer:

Period Demand Forecast Absolute Error Error2 (Absolute Error / AD)*100


January 300
February 356
March 387
April 381 347.67 33.33 1,110.89 8.75%
May 347 374.67 27.67 765.63 7.97%
June 352 371.67 19.67 386.91 5.59%
July 360
Total 80.67 2,263.43 22.31%
MAD 26.89
MSE 754.48
MAPE 7.44%

Solution:

P a g e 2|3
Jay]
YOPMAN - PRODUCTION AND OPERATIONS MANAGEMENT (WITH LABORATORY)
Approaches to Forecasting
III. Forecasting Time Series Regression
Problem:

Period x Actual Demand xy x2


January 300
February 356
March 387
April 381
May 347
June 352
Total

1) What is the intercept (a-intercept)?


2) What is the slope (b)?
3) What is the forecasting equation?
4) What is the forecast for September

Answer:

Period x Actual Demand xy x2


January 1 300 300 1
February 2 356 712 4
March 3 387 1,161 9
April 4 381 1,524 16
May 5 347 1,735 25
June 6 352 2,112 36
Total 21 2,123 7,544 91

1) What is the intercept (a-intercept)? 331.12


2) What is the slope (b)? 6.49
3) What is the forecasting equation? Y = 331.12+6.49x
4) What is the forecast for September 389.53

Solution:

P a g e 3|3
Jay]

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