Problem 2: Considering the fact that the number of students is relatively consta

Question

Problem 2: Considering the fact that the number of students is relatively constant throughout the academic year, the college's cafeteria is planning for the second semester based of the actual sales the first semester. Actual Sales of Fall 2016 Forecast of Spring Month 2017 September October November December200 250 300 280 With the given information, can the forecast of November be obtained using a 3-month weighted moving average? Explain you answer. Calculate the weighted moving average for December using the following weights 5,2 & 3. If exponential smoothing is used to forecast sales, which value ofais preferred 0.8 and =0.5. Assume the forecast of October is 220 meals. 1. 2. 3. Problem3

Explanation / Answer

1. The formula for 3 month weighted moving average will be :

Ft = wt-1*Dt-1+wt-2Dt-2 +wt-3Dt-3

Where, Ft = Forecast for t month , t = November 2017

wt-1 = weighting scheme for t-1 month , t-1 = October 2016

Dt-1 = Actual Demand for t-1 month , demand for october 2016 = 300

wt-2= weighting scheme for t-2 month , t-2 = September 2016

Dt-2 = Actual Demand for t-1 month , demand for september 2016 = 250

wt-3= weighting scheme for t-3 month , t-3 = August 2016

Dt-3 = Actual Demand for t-3 month , demand for August 2016 = "Not Availabe"

As we do not have actual sales number for t-3 month i.e August 2016 is not available in the question. We can not forecast for November 2017 using 3 month moving average method.

2)

Ft = wt-1*Dt-1+wt-2Dt-2 +wt-3Dt-3

Where, Ft = Forecast for t month , t =December 2017

wt-1 = weighting scheme for t-1 month = 5/(5+2+3) =5/11=0.45 , t-1 = November 2016

Dt-1 = Actual Demand for t-1 month , demand for November 2016 = 280

wt-2= weighting scheme for t-2 month = 2/(5+2+3)= 2/11= 0.18, t-2 = October 2016

Dt-2 = Actual Demand for t-1 month , demand for october 2016 = 300

wt-3= weighting scheme for t-3 month = 3/(5+2+3) = 3/11= 0.27 , t-3 = September 2016

Dt-3 = Actual Demand for t-3 month , demand for september 2016 = 250

F December = 0.45*280 + 0.18*300 + 0.27* 250 = 250

3)

Ft =  Dt  +  (1-) Ft-1

Ft = Forecast for t month , t = November 2017

Dt = demand of t month = 280

= Smoothing constant

Ft-1 = Forecast for t-1 month = 220 , t = October 2017

At = 0.8

F November = 0.8*280 + 0.2*220 = 268

In the same way find forecast for December

F December = 0.8*DDecember +0.2* FNovember =0.8*200 +0.2*268 = 213.6

Measuring MSD (mean Square Deviation) at = 0.8 = ((FOctober - DOctober )2 + (F November -DNovember)2 -(F December - DDecember)2 )/3 = 2243

At = 0.5

Using similiar approach above

we can find,

F November = 0.5*280 + 0.5*220 =140+110 = 250

F December = 0.5*DDecember +0.5* FNovember = 225

Measuring MSD (mean Square Deviation) at = 0.5 = ((FOctober - DOctober )2 + (F November -DNovember)2 -(F December -  DDecember)2 )/3 = 2642

We can find out that MSD at = 0.8 < MSD at = 0.5 , so we can say that = 0.8 will be preferred

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