PRACTICE PROBLEMS: FORECASTING 1. Consider the data in the table below for month

Question

PRACTICE PROBLEMS: FORECASTING 1. Consider the data in the table below for monthly cerenl sales ($000) Month January February March April May June July August September October November December Sales ($000 $1,212 2 1,321 1,278 1,341 1,257 1,287 1.189 1,111 1,145 1,150 1,298 1,331 2 Average $2,243.33 Input this data into an Excel spreadsheet and do the following a. Calculate a four-month moving average forecast. What is you forecast for month 13 b. Use exponential smoothing with a smoothing factor of 0.30 to calculate the forecast month 13 2. Fit a simple regression model to the data in problem 1 above. What is your forecast fo 2 month 13?

Explanation / Answer

a) Moving Average Forecast for the Thirteenth Month(By Excel Calculation) = $1231000(approx)

b) By Exponential Smoothing Forecast for Thirteenth Month(Damping Factor(1-Alpha)=0.7) = $1249030(approx)

c) Forecast By Simple Linear Regression in Excel for 13th Month = $1208000(approx)

Month Sales($000) Forecast(Moving Average) Forecast(Exponential Smoothing) 1 1212 #N/A 2 1321 1212 3 1278 1244.7 4 1341 1254.69 5 1257 1288 1280.583 6 1287 1299 1273.5081 7 1189 1291 1277.55567 8 1111 1269 1250.988969 9 1145 1211 1208.992278 10 1150 1183 1189.794595 11 1298 1149 1177.856216 12 1331 1176 1213.899351 1231 1249.029546

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