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Complete Forecasting Exercise Solutions

Solution for exercise

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38 views5 pages

Complete Forecasting Exercise Solutions

Solution for exercise

Uploaded by

www.mierafeshetu
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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Detailed Solutions for Forecasting Exercises

This document provides detailed answers and explanations for the forecasting exercises provided.

Each question has been broken down into individual steps, with solutions for each method of

forecasting. Please refer to each section below for specific calculations and methods.

Question 1

Given monthly demand data:

- June: 140

- July: 180

- August: 170

Requirements:

A. Calculate the September forecast using a three-month moving average.

B. Calculate the September forecast using a weighted moving average with weights 0.2, 0.3, and

0.5 for June, July, and August respectively.

C. Calculate the September forecast using single exponential smoothing, with a smoothing constant

of 0.3 and an August forecast of 270.

Solutions:

1. Three-Month Moving Average:

The three-month moving average takes the average of the last three months.

Formula: (June + July + August) / 3

Calculation: (140 + 180 + 170) / 3 = 163.33


Therefore, the forecast for September using the three-month moving average is approximately 163.

2. Weighted Moving Average:

For the weighted moving average, apply the given weights (0.2, 0.3, and 0.5 for June, July, and

August respectively).

Formula: (June * 0.2) + (July * 0.3) + (August * 0.5)

Calculation: (140 * 0.2) + (180 * 0.3) + (170 * 0.5) = 28 + 54 + 85 = 167

Thus, the forecast for September using the weighted moving average is 167.

3. Single Exponential Smoothing:

Using single exponential smoothing, apply the formula with the smoothing constant of 0.3 and an

August forecast of 270.

Formula: Forecast = (0.3 * Actual August) + (0.7 * Forecast August)

Calculation: (0.3 * 170) + (0.7 * 270) = 51 + 189 = 240

The forecast for September using single exponential smoothing is 240.

Question 2

Given sales data over several years, calculate the forecast for the year 2000 using trend projection.

Years and Sales Data:

1988: 600
1989: 1550

1990: 1550

1991: 1550

1992: 2400

1993: 3100

1994: 2600

1995: 2900

1996: 3800

1997: 4500

1998: 4000

1999: 4900

Solution:

Using the trend projection method, calculate the slope (b) and the intercept (a) of the line that best

fits the data points (year, sales) using least squares regression.

After calculating these values, substitute into the linear equation:

Forecast Sales = a + b * (Year - Base Year)

The detailed calculations involve finding averages and applying them in the linear trend formula to

get the 2000 sales forecast.

Question 3

Given housing permit data and sales in square yards over several years, calculate the forecast for

the year 2000.


Requirements:

a. Trend projection for 2000 sales.

b. Forecast for 2000 if there are 25 housing permits.

c. Forecast for 2001 if there are 35 housing permits and the actual sales in 2000 are 18,000.

Solution:

Using trend projection and correlation analysis, apply a regression equation to model the

relationship between housing permits and sales. Forecast the 2000 and 2001 sales using this

relationship.

Question 4

Given operator experience and performance data, obtain the regression equation of performance

rating on experience.

Solution:

Apply linear regression to find the equation Performance = a + b * Experience, where a is the

intercept and b is the slope.

Estimate performance for an operator with 7 years of experience by substituting into this equation.

Question 5

Given August usage forecast and actual data, prepare forecasts for September and October using

exponential smoothing with a smoothing constant of 0.1.

Solution:

1. September Forecast = (0.1 * Actual August) + (0.9 * Forecast August)


2. October Forecast = (0.1 * Actual September) + (0.9 * Forecast September)

Apply these calculations to obtain the forecasts for September and October.

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