(20) Problem 8/Ch 11, p.278. At the ABC Floral Shop, an argument developed betwe
ID: 442399 • Letter: #
Question
(20) Problem 8/Ch 11, p.278. At the ABC Floral Shop, an argument developed between two of the owners, Bob and Henry, over the accuracy of forecasting methods. Bob argued that exponential smoothing with a = .1 would be the best method. Henry argued that the shop would get a better forecast with a =.3.
Using F1 =100 and the data from problem 3, which of the two managers is right? You must provide detailed reasoning to support your answer.
Day
Demand
Day
Demand
1
200
8
154
2
134
9
182
3
147
10
197
4
165
11
132
5
183
12
163
6
125
13
157
7
146
14
169
Calculate exponential smoothing for alpha .1 and alpha .3
Calculate three moving averages estimate demands and five period estimate demands
Which manager is right and why?
Day
Demand
Day
Demand
1
200
8
154
2
134
9
182
3
147
10
197
4
165
11
132
5
183
12
163
6
125
13
157
7
146
14
169
Explanation / Answer
(A)
Forecast when alpha is 0.1
Forecat when alpha is 0.3
Comparing MAD ( Mean Absolute Deviation) of both the table we get that table with alpha 0.3 has the lowest MAD. Lower is the MAD better is the Forecast. Henry is right.
(B)
Comparing MAD ( Mean Absolute Deviation) of both the 3 moving average and 5 moving average we get that the 3-day moving average has the lowest MAD. Therefore manager forecasting using 3 day moving average estimate is the best forecast method among the both. By decreasing the Averaging Period, the forecast is more responsive to fluctuations in demand (high impulse response and low noise dampening) .
Day Demand Forecast Deviation Absolute Deviation 1 200 100 100 100 2 134 110 24 24 3 147 112 35 35 4 165 116 49 49 5 183 121 62 62 6 125 127 -2 2 7 146 127 19 19 8 154 129 25 25 9 182 131 51 51 10 197 136 61 61 11 132 142 -10 10 12 163 141 22 22 13 157 144 13 13 14 169 145 24 24 sum of Absolute Deviation 497 MAD 35.5Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.