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Practice Problems: Chapter 4, Forecasting: Vela, Jhombelle Bsess SM 3-2

The document contains 3 practice problems related to forecasting: 1. Develop a 3-week moving average to forecast auto sales and compute the mean absolute deviation (MAD) and mean squared error (MSE). 2. Forecast auto sales by weighting the past 3 weeks and compute MAD and MSE. 3. Use simple exponential smoothing with a smoothing constant of 0.1 to forecast demand. The forecast for January 1 was 500 units and actual demand was 450 units. Calculate the forecast for January 8.

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JHOMBELLE VELA
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142 views3 pages

Practice Problems: Chapter 4, Forecasting: Vela, Jhombelle Bsess SM 3-2

The document contains 3 practice problems related to forecasting: 1. Develop a 3-week moving average to forecast auto sales and compute the mean absolute deviation (MAD) and mean squared error (MSE). 2. Forecast auto sales by weighting the past 3 weeks and compute MAD and MSE. 3. Use simple exponential smoothing with a smoothing constant of 0.1 to forecast demand. The forecast for January 1 was 500 units and actual demand was 450 units. Calculate the forecast for January 8.

Uploaded by

JHOMBELLE VELA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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VELA, JHOMBELLE

BSESS SM 3-2

Practice Problems: Chapter 4, Forecasting

Problem 1:
Auto sales at Carmen’s Chevrolet are shown below. Develop a 3-week moving average.
Have an error analysis and compute for MAD & MSE and graph your answer.
Week Auto 3 Month Moving Demand Forecast
Sales Average 14
1 8 12
10
2 10
8
3 9 6
4 11 (8 + 10 + 9)/3= 9 4

5 10 (10 + 9 + 11)/3= 10 2
0
6 13 (9 + 11 + 10)/3= 10 1 3 5 7 9 11

7 - (11 + 10 + 13)/3= 11.33


Error analysis
Week Auto Forecas Error Absolut Squared
Sales t e
1 8
2 10
3 9
4 11
5 10
6 13 9 2 2 4
7 -
10 0 0 0
10 3 3 9

Problem 2: 11.33 -11.33 11.33 128.37


Carmen’s decides to Total 16.33 141.37 forecast auto sales
by weighting the three weeks as
follows: Average 4.08 35.34
Have an error analysis and
compute for MAD & MSE and graph your answer.

1
Week Auto 3 Month Moving Average Demand Forecast
Sales 14
1 8 12
10
2 10 8
3 9 6
4
4 11 [(3 x 9) + (2 x 10) + (8)]/6= 9.17 2
5 10 [(3 x 11) + (2 x 9) + (10)]/6= 10.17 0
1 3 5 7 9 11

6 13 [(3 x 10) + (2 x 11) + (9)]/6= 10.17


7 - [(3 x 13) + (2 x 10) + (11)]/6= 11.67

Error analysis
Week Auto Forecas Error Absolute Squared
Sales t
1 8
2Weights10 Period
3Applied9
3 Last week
42 11 Two weeks
5 10 ago
1 Three 9.17 1.83 1.83 3.35
6 13 weeks ago
10.17 -0.17 0.17 0.03
76 - Total
Problem 3:
10.17 2.83 2.83 8.01
A firm uses simple exponential
smoothing with 11.67 -11.67 11.67 136.19 to forecast
demand. The forecast for the
week of January 1 Total 16.5 147.58 was 500 units
whereas the actual demand turned out
Average 4.13 36.90
to be 450 units. Calculate the
demand forecast for the week of
January 8.

Predicted Demand = 500


Actual Demand = 450
Smoothing constant  = 0.1
New Forecast = 500 + 0.1(450 – 500)
= 500 + -5

2
= 495 units

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