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Chapter 4: Q18-6OQ (page 477)

Question: The following tabulations are actual sales of units for six months and a starting forecast in January.


 ACTUAL
 FORECAST
January
 100
 80
February
 94

March
 106

April
 80

May
 68

June
 94

a. Calculate forecasts for the remaining five months using simple exponential smoothing with 伪= 0.2.

b. Calculate MAD for the forecasts.

Short Answer

Expert verified

Answer

(a) Forecasts for the remaining five months = 80, 84, 86, 90, 88, 84

(b) MAD = 15

Step by step solution

01

Step-by-Step Solution Step 1: (a) Calculate forecasts for the remaining five months using simple exponential smoothing

The formula shown below is used for the calculation of the forecasts for the remaining five months by using simple exponential smoothing with 伪= 0.2.

Ft+1=Ft+伪At-Ft,伪=.20

02

(b) Formula for calculating MAD for the forecasts

The formula for calculating MAD for the forecasts is shown below:


MAD=SumofabsolutevalueofeachdeviationNoofdeviationMAD=20+10+20+10+20+106=906=15

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