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forecasting_Assignment_1

The document outlines a series of forecasting assignments involving various statistical methods for analyzing sales and demand data over multiple weeks and periods. It includes tasks such as fitting linear models, estimating errors, applying moving averages, exponential smoothing, and seasonal analysis. Additionally, it discusses the importance of accurate forecasting in a competitive business environment, specifically for an office supply company.

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4 views

forecasting_Assignment_1

The document outlines a series of forecasting assignments involving various statistical methods for analyzing sales and demand data over multiple weeks and periods. It includes tasks such as fitting linear models, estimating errors, applying moving averages, exponential smoothing, and seasonal analysis. Additionally, it discusses the importance of accurate forecasting in a competitive business environment, specifically for an office supply company.

Uploaded by

kicked.partnership
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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Assignment 1

Forecasting

Q1. The weekly deliveries of a car to an automobile dealer are as shown below. Fit the straight-line
model: xt = a + bt + €t. Estimate the error variance.

Week 1 2 3 4 5 6 7 8 9 10 11 12
Sales 75 74 79 83 69 78 71 80 77 85 81 70

Q2. Weekly sales for the Hot Pizza are as follows:

Weeks Demand ($) Weeks Demand ($)


1 108 7 96
2 116 8 102
3 118 9 112
4 124 10 102
5 96 11 92
6 119 12 91
Table 1: Weeks vs. Demands

a) Estimate demand for the next four weeks using the 4-week simple moving average as well as the
simple exponential smoothing with =0.1.
b) Evaluate the MAD, MAPE, MSE, bias and TS in each case.
c) Which of the two methods do you prefer? Why?

Q3. Consider the time series data shown in Table 2.


a) Make a time series plot of the data.
b) Use simple exponential smoothing with =0.2 to smooth first 40 time periods of this data. How well
does this smoothing procedure work?
c) Make one-step-ahead forecasts of the last 10 observations. Determine the forecast errors.

Period Period Period Period Period


1 48.7 11 49.1 21 45.3 31 50.8 41 47.9
2 45.8 12 46.7 22 43.3 32 46.4 42 49.5
3 46.4 13 47.8 23 44.6 33 52.3 43 44
4 46.2 14 45.8 24 47.1 34 50.5 44 53.8
5 44 15 45.5 25 53.4 35 53.4 45 52.5
6 53.8 16 49.2 26 44.9 36 53.9 46 52
7 47.6 17 54.8 27 50.5 37 52.3 47 50.6
8 47 18 44.7 28 48.1 38 53 48 48.7
9 47.6 19 51.1 29 45.4 39 48.6 49 51.4
10 51.1 20 47.3 30 51.6 40 52.4 50 47.7
Table 2: Periodic data
Q4. The data in the Table 3 exhibits a linear trend.
a) Verify that there is a trend by plotting the data.
b) Using the first 12 observations, develop an appropriate procedure for forecasting.
c) Forecast the last 12 observations and calculate the forecast errors. Does the forecast procedure seem
to be working satisfactorily?

Period Period Period Period


1 315 7 318 13 460 19 520
2 195 8 355 14 395 20 400
3 310 9 420 15 390 21 420
4 316 10 410 16 450 22 580
5 325 11 485 17 458 23 475
6 335 12 420 18 570 24 560
Table 3: Periodic data

Q5. Reconsider the linear trend data in Table 3. Take the first difference of this data and plot the time
series of the first differences. Has differencing removed the trend? Use exponential smoothing on the
first 11 differences. Instead of forecasting the original data, forecast the first differences for the
remaining data using exponential smoothing and use these forecasts of the first differences to obtain
forecasts for the original data.

Q6. Table 4 gives four years of data on monthly demand for a soft drink.
a) Make a time series plot of the data and verify that it is seasonal. Why do you think seasonality is
present in these data?
b) Use winters’ multiplicative method for the first three years to develop a forecasting method for these
data. How well does this smoothing procedure work?

Period Period Period Period


1 143 13 189 25 359 37 332
2 191 14 326 26 264 38 244
3 195 15 289 27 315 39 320
4 225 16 293 28 362 40 437
5 175 17 279 29 414 41 544
6 389 18 552 30 647 42 830
7 454 19 674 31 836 43 1011
8 618 20 827 32 901 44 1081
9 770 21 1000 33 1104 45 1400
10 564 22 502 34 874 46 1123
11 327 23 512 35 683 47 713
12 235 24 300 36 352 48 487
Table 4: Periodic data

Q7. The Instant Paper Clip Office Supply Company sells and delivers office supplies to companies,
schools, and agencies within a 50-mile radius of its warehouse. The office supply business is
competitive, and the ability to deliver orders promptly is a big factor in getting new customers and
maintaining old ones. (Offices typically order not when they run low on supplies, but when they
completely run out. As a result, they need their orders immediately.) The manager of the company wants
to be certain that enough drivers and vehicles are available to deliver orders promptly and that they have
adequate inventory in stock. Therefore, the manager wants to be able to forecast the demand for
deliveries during the next month. From the records of previous orders, management has accumulated the
following data for the past 10 months.

a) Compute the monthly demand forecast for February through November using the naive method.
b) Compute the monthly demand forecast for April through November using a 3-month moving average.
c) Compute the monthly demand forecast for June through November using a 5-month moving average.
d) Compute the monthly demand forecast for April through November using a 3-month weighted
moving average. Use weights of 0.5, 0.33, and 0.17, with the heavier weights on the more recent
months.
e) Compute the mean absolute deviation for June through October for each of the methods used. Which
method would you use to forecast demand for November?

***

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