Please show all steps and what equations you used. Thank you. Monthly sales for

Question

Please show all steps and what equations you used. Thank you.

Monthly sales for a six-month The ABC Company sells Super gaming computers. period are as follows Sales Month an Feb ar 16 18 20 24 May June Compute the sales forecast for July using the following approaches: a. Mean month simple moving average (fill in the number of months you use) What would your forecast be? Why? How did you come up with this number? (Do not simply choose a or b above, use reason and what you know about forecasting to make this estimate and explain it. FYI there is NOT only one right answer)

Explanation / Answer

a) Mean = (18+22+16+18+20+24)/6 = 19.67

b) Using 3 month simple average, Forecast for July = (April+May+June)/3 = (18+20+24)/3 = 20.67

Using Mean and 3 month moving average to find MAD:

For Mean:

MAD = 15.37/5 = 3.07

For 3 period moving average:

MAD = 8/3 = 2.67

Hence, MAD is lower for 3 period moving average, so it is better

Period Demand (D) Forecast (F1) Error (D-F) Error Abs                 1                    18                 2                    22              18.00             4.00           4.00                 3                    16              20.00            (4.00)           4.00                 4                    18              18.67            (0.67)           0.67                 5                    20              18.50             1.50           1.50                 6                    24              18.80             5.20           5.20 21 118             6.03         15.37

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