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: Actual demand for a product for the past three months was:

Three months ago

400 units

Two months ago

350 units

Last month

325 units

  1. Using a simple three-month moving average, make a forecast for this month.
  2. If 300 units were demanded this month, what would your forecast be for next month?
  3. Using simple exponential smoothing, what would your forecast be for this month if the exponentially smoothed forecast for three months ago was 450 units and the smoothing constant was 0.20?

Short Answer

Expert verified

Answer

A moving average (rolling average or running average) could be a calculation to investigate data points by creating a series of averages of various subsets of the complete data set. It's also called a moving mean.

Step by step solution

01

a) Using a simple three-month moving average, make a forecast for this month

By using a simple three-month moving average, the forecast for this month is calculated as follows:

Simplemovingaverage=A1+A2+..........+Ann

Forecast(thismonth)=325+350+4003=358

02

b) If 300 units were demanded this month, what would your forecast be for next month

The forecastis the calculation that is the data from real-time activities and is dependent on the set of variables that are figured out for the number of statistical forecast situations.

If 300 units were demanded this month, then the forecast be for next month is calculated as follows:

Simplemovingaverage=A1+A2+..........+Ann

forecastforthenextmonth=300+325+3503=325

03

Using simple exponential smoothing, what would your forecast be for this month if the exponentially smoothed forecast for three months ago was 450 units and the smoothing constant was 0.20

If the exponentially smoothed forecast for three months ago was 450 units and the smoothing constant was 0.20, the forecast for this month is calculated as follows:

Ft=Ft-1+(At-1-Ft-1)

role="math" localid="1650535070962" Ftwomonthsago=450+.20(400-450)=440Fonemonthago=440+.20(350-440)=422Fthismonth=422+.20(325-422)=403

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