Unit sales of Gatorade for a grocery store have been collected from the last 6 w
ID: 397737 • Letter: U
Question
Unit sales of Gatorade for a grocery store have been collected from the last 6 weeks. Respond to parts a through e. Round all answers for parts a through d to whole numbers.
a. Build a forecast using the exponentially weighted moving average technique.
The forecast for week 4 has been added to the table. Use = 0.5 to forecast weeks 5 and 6. Fill in all cells in the forecast column and absolute error column. If a value is zero, do not leave the cell blank, enter 0.
b. Mean absolute deviation for the EWMA forecast =
c. Build a 3-period moving average forecast. Fill in all cells in the forecast column and absolute error column. If a value is zero, do not leave the cell blank, enter 0.
d. Mean absolute deviation for the moving average forecast =
e. Based on the results in parts b and d, we should choose the method with the (Click to select) higher lower MAD to forecast week 7.
Week Actual Sales Forecast |Error| 1 800 2 600 3 700 4 600 700 5 1000 6 800Explanation / Answer
A.
Working note:
EWMA forecast for week 5 = (600-700)*.5 + 700 = 650
EWMA forecast for week 6 = (1000-650)*.5 + 650 = 825
B.
MAD = sum of absolute errors/no. of observations = (100+350+25)/3 =158.33
C.
C.
Working note:
3 period MA for week 4 = (800+600+700)/3 = 700
3 period MA for week 5 = (600+700+600)/3 = 633.33
3 period MA for week 4 = (700+600+1000)/3 = 766.67
D.
MAD = (100 + 366.67+33.33)/3 =166.67
E.
We should choose exponential method as it gives relatively lower MAD to forecast for week 7.
Week Actual Sales Forecast |Error| 1 800 2 600 3 700 4 600 700 100 5 1000 650 350 6 800 825 25Related Questions
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