The Polish General%u2019s Pizza Parlor is a small restaurant catering to patrons

Question

The Polish General%u2019s Pizza Parlor is a small restaurant catering to patrons with a taste for European pizza. One of its specialties is Polish Prize pizza. The manager must forecast weekly demand for these special pizzas so that he can order pizza shells weekly. Recently, demand has been as follows:

a. Forecast the demand for pizza for June 25 through July 16 by using the simple

moving average method with n=3. Then, repeat the forecast by using the weighted moving average method with n=3 and weights of 0.50, 0.30, and 0.20, with 0.50 applying to the most recent demand.

b. Calculate the MAD for each model. Which forecast do you prefer? Why?

Explanation / Answer

a.

b.

Current Week Simple Moving Avg Forecast For Next Week Weighted Moving Avg. Forecast for Next Week 16-Jun (56+52+65)/3 = 57.7 or 58 [(0.5 x 52) + (0.3 x 65) + (0.2 x 50)] = 55.5 or 56 23-Jun (52+65+50)/3 = 55.7 or 56 [(0.5 x 56) + (0.3 x 52) + (0.2 x 65)] = 56.6 or 57 30-Jun (55+56+52)/3 = 54.3 or 54 [(0.5 x 55) + (0.3x 56) + (0.2 x 52)] = 54.7 or 55 7-Jul (60+55+56)/3 = 57 [(0.5 x 60) + (0.3 x 55) + (0.2 x 56)] = 57.7 or 58

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