Use the table below to answer questions 8 – 10. Sales Dec­15 ……..245 Jan­16……….6

Question

Use the table below to answer questions 8 – 10.  

Sales

Dec­15 ……..245

Jan­16……….634

Feb­16 ……..593

Mar­16……. 948

Apr­16……… 394

May­16…….. 583

Jun­16…….. 958

Jul­16………. 382

Aug­16…….. 574

Sep­16…….. 382

Oct­16…….. 495

Nov­16 …….384

Dec­16…….. 285

Jan­17 ……..

Digicel Jamaica wants to forecast its sales for January 2017. They have collected data for the past year. They are using a three­month moving average to forecast sales. Please note that alpha is 0.4 and the weighs are 0.3, 0.2, and 0.5 respectively.

What is the moving average forecast for January 2017?

What is the weighted moving average forecast for January 2017?

What is the exponential smoothing forecast for January 2017?

Explanation / Answer

a. 3 Month moving average = 495+384+285 / 3 = $334.5

b. Weighted moving average = 0.3*495+0.2*384+0.5*285 = $367.8

c. Exponential smoothing forecast = Alpha*A(t-1) + (1-Alpha)*F(t-1)

F(t-1) = Forecasted demand of Dec 16 = 3 month moving average of Dec 16

= (495+384+285)/3 = $388

Hence

Forecasted demand for Jan 2017 = 0.4*285 + (1-0.4)*388

= $346.80

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