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TUTORIAL QUESTIONS – MS29P

1. Forecast used for new product planning, capital expenditure, facility location or
expansion and research and development are typically called:
(a) long range forecast
(b) medium range forecast
(c) short range forecast
(d) all of the above
(e) none of the above
2. Three pieces of data are needed for exponential smoothing. They are: ………………
3. Long range forecasting often includes finding independent and dependent variables and
using a statistical technique know as ……………………
4. Rank exponential smoothing forecasting technique in terms of the following;
(a) accuracy (b) cost (c ) availability of historical data
(d) availability of skill men (e) time for analysis (f) time horizon
5. For the data below, develop a 3-month moving average forecast

Automobile Automobile
Month Battery Sales Month Battery Sales
January 20 July 17
February 21 August 18
March 15 September 20
April 14 October 20
May 13 November 21
June 16 December 23
6. Given the following data, develop a 3-year moving average forecast of demand.
Year 1 2 3 4 5 6 7 8 9 10 11
Demand 7 9 5 9 13 8 12 13 9 11 7
7. For the demand data in Table below, calculate the four months moving average for June 2004
and Sept 2004.
Time period – 2004 Actual Calculator demand (units
Jan 10,000
Feb 12,000
Mar 15,000
Apr 13,000
May 25,000
June 20,000
July 18,000
Aug 14,000
Sept 16,000
Oct 15,000
Nov 9,000
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Dec 12,000
8. Data collected on the yearly demand for 50 lb. bags of grass seed at Bob’s Hardware Store
are shown in the following table. Develop a three-year moving average to forecast sales.
Then estimate demand again with the weighted moving average in which sales in the most
recent year are given a weight of 2 and sales in the other two years are each given a weight of
1. Which method do you think is best?
Year Demand for Grass Seed (000 of bags)
1 4
2 6
3 4
4 5
5 10
6 8
7 7
8 9
9 12
10 14
11 15
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9. The Shady Lady Corporation makes umbrella and parasols. In order to plan for production
man-hours, they are keenly interested in anticipating monthly demand. They have recently
noticed that the sales for a month appear to be directly related to the total rainfall reported for
the preceding month by the weather bureau. A first step might be to test this hypothesis using
the past sis month’s data. Let x = the number of inches of rainfall recorded for the preceding
month (the independent or uncontrollable variable) and y = the present month’s sales (zeros
omitted). These are arranged in the following table with the other figures that need to be
calculated.
Month Sales Rain
1 107 2.3
2 172 3.8
3 201 4.4
4 255 5.1
5 206 4.3
6 144 3.1
Assuming that the projected rainfall for the next period is 5.0, what is the forecasted
sales?
10. Demand for heart transplant surgery at Washington General Hospital has increased steadily
in the past few years, as seen in the table.
Year Outpatient Surgeries Performed
1 45
2 50
3 52
4 56
5 58
6 ?
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The director of medical services predicted six years ago that the demand in year 1 would be
for 41 surgeries
(a) Use exponential smoothing, first with a smoothing constant of 0.6 and then with one of
0.9, to develop forecasts for years 2 through 6.

11. Tongren Construction Company renovates old homes in Balvenie, Mandeville. Over time,
the company has found that its dollar volume of renovation work is dependent on the
Balvenie area payroll. The following table lists Tongren’s revenues and the amount of money
earned by wage earners in Balvenie during the following six years.

Tongren’s Sales ($000,000) Local Payroll ($000,000,000)

Forecast the sales if the payroll is 8.

12. Room registration in the Trelawny Hotel has been recorded for the past nine years.
Management would like to determine the mathematical trend of guest registration in order of
project future occupancy. This estimate would help the hotel determine whether future
expansion will be needed. Given the following time series data, develop a regression
equation relating registrations to time. Then forecast the next year’s registrations. Room
registrations are in the thousands:
Year 1: 17 Year 2: 16 Year 3: 17 Year 4: 21 Year 5: 20
Year 6: 20 Year 7: 23 Year 8: 25 Year 9: 24

D. Anthony Chevers