we are interested in developing a forecast for the inventory for period 11 1. a

Question

we are interested in developing a forecast for the inventory for period 11

1. a develop a 5-period moving average

   b. 3 -period wighted moving average forecast (the weights should be 0.7 and 0.2 for the most recent and next most recent periods.

2. out of the three forecasting methods which appears to be the best method based on the forecasting results per periods 6 through 10?

Period1 Inventory Level (millions of dollars Damage (Thousands of dollars Average Age of Inventory (Days) 1 $11 $80 31 2 $15 $90 45 3 $13 $70 98 4 $10 $60 15 5 $7 $50 25 6 $9 $70 31 7 $13 $80 82 8 $14 $65 72 9 $10 $70 50 10 $12 $60 45

Explanation / Answer

The best method based on the forecasting results per periods 6 through 10 is the 3 month weighted average method, as it gives the highest forecast.

Month Sales Forecasts Constant 1 11 0.25 2 15 14 3 13 14.25 4 10 13.94 5 7 12.95 6 9 11.46 7 13 10.85 8 14 11.39 9 10 12.04 10 12 11.53 Exponential smoothing 11.65 Five month moving average 11.6 3 month Weighted Average forecast 11.8

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