Chapter 4: Q18-22OQ (page 481)
Your manager is trying to determine what forecasting method to use. Based upon the following historical data, calculate the following forecast and specify what procedure you would utilize.
Month | Actual demand |
1 | 62 |
2 | 65 |
3 | 67 |
4 | 68 |
5 | 71 |
6 | 73 |
7 | 76 |
8 | 78 |
9 | 78 |
10 | 80 |
11 | 84 |
12 | 85 |
a. Calculate the simple three-month moving average forecast for periods 4鈥12.
b. Calculate the weighted three-month moving average using weights of 0.50, 0.30, and 0.20 for periods 4鈥12.
c. Calculate the single exponential smoothing forecast for periods 2鈥12 using an initial (F1) of 61 and anof 0.30.
d. Calculate the exponential smoothing with trend component forecast for periods 2鈥 12 using an initial trend forecast (T1) of 1.8, an initial exponential smoothing forecast (F1) of 60, and of 0.30 andof 0.30.
e. Calculate the mean absolute deviation (MAD) for the forecasts made by each technique in periods 4鈥12. Which forecasting method do you prefer?
Short Answer
The solutions of (a), (b), (c), (d), and (e) are explained in the steps shown below.


