ASSIGNMENT ON FORECASTING

The data on the tables below are the demand in dozens of doughnuts of Krispy Doughnuts for the past
six weeks, make a forecast for week 7 using 3 month moving average, exponential smoothing with an
alpha of 0.10, and linear trend.

Exponential Smoothing here, alpha = 0.10 3-week moving average here -------

Period Actual Demand Forecast Absolute Error Forecast Absolute Error

Jan 200

Feb 256 200 256-200 = 56

(256x.10) +
(200x.90)=
205.60 287-205.6 =
March 287
81.40

(287x.10) + 282-
(200+256+287)/3
(205.6x.90)= 247.67=
282-213.74 = = 247.67
April 282 213.74 34.33
68.26

(282x.10) +
(256+287+282)/3 247-275=
(213.74x.90)=
247-220.57 = = 275 28
May 247 220.57
26.43

247x.10) +
(287+282+247)/3 252-272=
(220.57x.90)=
= 272 20
June 252 223.2 252-223 = 28.79

(252x.10) + (282+247+252)/3
(223.21x.90)= = 260.33
July
226.09

Total 1,524 1,089.21 260.88 794.67 82.33

Mean Absolute Error (MAD 260.88 /5 = 52.18 82.33/3 = 27.44

 --- Perform linear trend here

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 1,128 16

May 5 247 1,235 25

June 6 252 1,512 36

Total 21 1,524 5,448 91

Answer the following question. Use your solution above in answering.

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

average? 260.33

2. What is your forecast for week 7 using exponential

smoothing? 226.088
3. Which is the better forecasting technique for the data,
moving average or exponential smoothing? Since it lays a
greater emphasis on the most current observation,
exponential smoothing is better forecasting technique for
the data.

4. Using the 3 month moving average, what period did your

forecast start? The month of April

5. If 4 month moving average is used, what period must you

start your forecast? The month of 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? 264

8. What is the linear trend equation? y = 231.22 + 6.514 x

9. What does your slope (b) indicate, increasing or decreasing

demand? The slope is increasing demand since it is positive.

10. Using linear trend, what is the forecast for week 7? 276.8