Two experienced managers at Wilson Boat, Inc. are resisting the introduction of
ID: 471807 • Letter: T
Question
Two experienced managers at Wilson Boat, Inc. are resisting the introduction of a computerized exponential smoothing system, claiming that their judgmental forecasts are much better than any computer could do. Their past record of predictions is as follows:
Week
Actual Demand
Manager’s Forecast
1
4,000
4,500
2
4,200
5,000
3
4,200
4,000
4
3,000
3,800
5
3,800
3,600
6
5,000
4,000
7
5,600
5,000
8
4,400
4,800
9
5,000
4,000
10
4,800
5,000
a. How would the manager’s forecast compare to a single exponential smoothing forecast using = 0.4?
Week
Actual Demand
Manager’s Forecast
1
4,000
4,500
2
4,200
5,000
3
4,200
4,000
4
3,000
3,800
5
3,800
3,600
6
5,000
4,000
7
5,600
5,000
8
4,400
4,800
9
5,000
4,000
10
4,800
5,000
Explanation / Answer
Solution:
Formula :
F2= F1+ (A1-F1)
Wherein F2 = forecast of the 2nd week
F1 = Forecast of 1st week
A1= Actauals of the first week
= 0.4
Similarly the forecast for the 11th week will be found by using following formula:
F11= F10+ (A10-F10)
F11 = 5,000+0.4 (4800-5000)
F11= 4920/-
So the forecast for the 11th week would 4920/-
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