Tutorial 2 Forecasting

1. The following gives the number of pints of type B blood used at Penang Pantai Hospital
in the past 6 weeks:

Week of Aug 31 Sept 7 Sept 14 Sept 21 Sept 28 Oct 5

Pints used 360 389 410 381 368 374
Forecasting the demand of the week October-12 using

a) 3-week moving average

b) 3-week weighted moving average with weights of 1, 3, and 6, using 6 for the most
recent week.
c) Exponential smoothing with a forecast for August 31 of 360, and α = 0.2.

(P4.1)

2. Demand for a product A was presented in table below.

Year 1 2 3 4 5 6 7 8 9 10 11
Demand 7 9 5 9 13 8 12 13 9 11 7
a) Do you observe any pattern for the demand? If yes, identify the pattern.
b) Using 3-year moving average, forecast the for year 4 to year 12.
c) Using 3-year weighted moving average, forecast the for year 4 to year 12 with
weights of 1, 3 and 6.
d) Assume forecast for year 1 is 6, develop a forecast for year 2 through 12 using
exponential smoothing with α = 0.4.

(P 4.2)
Tutorial 2 Forecasting

3. Actual demand for patients at Omaha Emergency Medical Clinic for the first 6 weeks of
this year are shown below.
Week 1 2 3 4 5 6
Demand 65 62 70 48 63 52

Clinic administrator Marc Schniederjans wants you to forecast patient demand at the
clinic for week 7 by using this data. You decide to use a weighted moving average
method to find this forecast.
a) Your method uses four actual demand levels, with weights of 0.333 on the present
period, 0.25 one period ago, 0.25 two periods ago, and 0.167 three periods ago.
b) If instead the weights were 20, 15, 15, and 10, respectively, how would the forecast
change? Explain why.
c) What if the weights were 0.40, 0.30, 0.20, and 0.10, respectively? Now what is the
forecast for week 7?
(P 4.7)

4. Data collected on the yearly registrations for a Six Sigma seminar at the Quality College
are shown in the following table:

YEAR
a) Develop a 3-year moving average to forecast registrations from year 4 to year 12.
b) Estimate demand again for years 4 to 12 with a 3-year weighted moving average in
which registrations in the most recent year are given a weight of 2, and registrations
in the other 2 years are each given a weight of 1.
c) Use exponential smoothing with a smoothing constant of 0.3 to forecast the
registrations at the seminar. Assume that the forecast for year 1 was 5,000 people
signing up.
d) Which forecasting method is recommended, using MAD, MSE and MAPE approach?
(P 4.10 / P 4.11)
Tutorial 2 Forecasting

5. Income at the architectural firm Spraggins and Yunes for the period February to July was
as follows:

Use trend-adjusted exponential smoothing to forecast the firm’s August income. Assume
that the initial forecast average for February is $65,000 and the initial trend adjustment is 0.

a) α = 0.1, β = 0.2.
b) α = 0.1, β = 0.8.
c) Using MSE, determine which smoothing constants provide a better forecast.
d) Base on your result in (c), forecast the demand in December.
(P 4.19 & P 4.20)

6. In the past, Peter Kelle’s tire dealership in Baton Rouge sold an average of 1,000 radials
each year. In the past 2 years, 200 and 250, respectively, were sold in fall, 350 and 300 in
winter, 150 and 165 in spring, and 300 and 285 in summer.

With a major expansion planned, Kelle projects sales next year to increase to 1,200
radials. What will be the demand during each season?
(P 4.25)

7. George Kyparisis owns a company that manufactures sailboats. Actual demand for
George’s sailboats during each of the past four seasons was as follows:

ASON 1234
George has forecasted that annual demand for his sailboats in year 5 will equal 5,600
sailboats. Based on this data and the multiplicative seasonal model, what will the
demand level be for George’s sailboats in the spring of year 5?

a) Use MSE approach, determine which of the following approach is suitable to forecast
the annual demand in year 5. Assume forecast for year 1 is 4200.
a. Exponential smoothing, α = 0.3.
b. Exponential smoothing, α = 0.2.
c. Trend adjusted exponential smoothing, α = 0.25, β = 0.3.
b) Base on your result in (a), what will the demand level be for George’s sailboats in the
spring of year 5?
(P 4.26)
Tutorial 2 Forecasting

8. Dr. Lillian Fok, a New Orleans psychologist, specializes in treating patients who are
agoraphobic (i.e., afraid to leave their homes). The following table indicates how many
patients Dr. Fok has seen each year for the past 10 years. It also indicates what the
robbery rate was in New Orleans during the same year.
a) Using trend (linear regression) analysis, predict the number of patients Dr. Fok will
see in years 11 and 12 as a function of time. How well does the model fit the data?
b) Assume linear relation between the robbery rate and Dr. Fok’s patient load. If the
robbery rate increases to 131.2 in year 11, how many phobic patients will Dr. Fok
treat? If the robbery rate drops to 90.6, what is the patient projection?
(P 4.30, P 4.51)