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Assignment On Forecasting

The document compares different forecasting techniques including exponential smoothing, 3-week and 3-month moving averages, and linear trend analysis to forecast demand over a 7 week period. Exponential smoothing with an alpha of 0.10 and 3-month moving average provided the best forecasts with mean absolute errors of 52.18 and 27.44 respectively. A linear trend line was also fitted to the data with a positive slope of 6.51, indicating an increasing trend in demand over time.

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Bb Vixen
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9 views

Assignment On Forecasting

The document compares different forecasting techniques including exponential smoothing, 3-week and 3-month moving averages, and linear trend analysis to forecast demand over a 7 week period. Exponential smoothing with an alpha of 0.10 and 3-month moving average provided the best forecasts with mean absolute errors of 52.18 and 27.44 respectively. A linear trend line was also fitted to the data with a positive slope of 6.51, indicating an increasing trend in demand over time.

Uploaded by

Bb Vixen
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Cruz, Audrey Mae Sampang A-333

Assignment On Forecasting

Exponential Smoothing, alpha = 0.10 3-week moving average


Actual
Absolute Absolute
Period Deman Forecast Forecast
Error Error
d
Jan 200 - - -
Feb 256 200 56 -
200 + 0.10 (256-200)
March 287 81.4 -
= 205.60
205.60 + 0.10 (287-
(200+256+287)/3 =
April 282 205.60) 68.26 (282 – 247.67)
247.67
=213.74 = 34.33
213.74 + 0.10 (282 –
(256+287+282)/3 =
May 247 213.74) 26.43 (247 – 275)
275
= 220.57 = 28
220.57 + 0.10 (252-
(287+282+247)/3 =
June 252 220.57) 28.79 (252 – 272)
272
= 223.21 = 20
223.21 + 0.10 (252-
(282+247+252)/3
July 223.21) -
= 260.33
= 226.09
Total 1289.21 260.88 82.33
Mean Absolute
52.18 27.44
Error (MAD)

Period x Actual demand (y) xy x2


Jan  1 200 200  1
Feb  2 256 512  4
March  3 287 861  9
April  4 282 1128  16
May  5 247 1235  25
June  6 252 1512  36
Total  21  1524  5448  91
 
Slope (b) = [n (∑xy) – (∑ x)( ∑y)] / [n (∑ x2)- ∑x)]
= [6 x (5448) - (21 x 1524)] / [(6 x 91) - (21) 2]
= 6.51
Intercept (a) = [∑ y – (b x (∑x)] / n
= (1524 - (6.51 x 21)) / 6
= 231.22

1. What is your forecast for week 7 using 3 month moving average?


= (200 + 256 + 287) / 3
= 260.33
2. What is your forecast for week 7 using exponential smoothing?
= 223.21 + 0.10 (252-223.21)
= 226.09
3. Which is the better forecasting technique for the data, moving average or exponential
smoothing?
Moving average
4. Using the 3-month moving average, what period did your forecast start?
April
5. If 4 month moving average is used, what period must you start your forecast?
May
6. In exponential smoothing, to what did you multiply the alpha of 0.10, actual demand
or forecast?
Actual demand
7. Given weights of 0.40 (most recent), 0.20, 0.20, and 0.20 for the preceding periods
respectively, what is the forecast for week 7 using weighted moving average?
= (252 x 0.40) + (247 x 0.20) + (282 x 0.20) + (287 x 0.20)
= 264
8. What is the linear trend equation?
Y = 231.22 +6.51x
9. What does your slope (b) indicate, increasing or decreasing demand?
The slope of positive 6.51 is interpreted as the unit change (increase) in actual
demand for each unit change in X.
10. Using linear trend, what is the forecast for week 7?
= Y = 231.22 +6.51(7)
= 276.79

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