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MGT 3

The document presents two quantitative forecasting methods: moving average and exponential smoothing. For July, the forecasted demand using a 3-month moving average is approximately 158 units, calculated from the sales of the previous three months. For February, the forecasted demand using exponential smoothing is 193 units, based on the actual demand in January and the previous forecast.

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5 views1 page

MGT 3

The document presents two quantitative forecasting methods: moving average and exponential smoothing. For July, the forecasted demand using a 3-month moving average is approximately 158 units, calculated from the sales of the previous three months. For February, the forecasted demand using exponential smoothing is 193 units, based on the actual demand in January and the previous forecast.

Uploaded by

snowpeachy56
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Problem 1: Moving Average Forecasting (Quantitative Method)

Problem Statement:
A company wants to forecast demand for the next month based on the sales from the previous
months. Here are the sales figures (in units) for the last 6 months:
Month Sales
January 120
February 135
March 150
April 145
May 160
June 170
The company decides to use a 3-month moving average.
Question:
What is the forecasted demand for July using a 3-month moving average?

Solution:
Step 1: Use the 3 most recent months (April, May, June):
Forecast for July=145+160+1703=4753≈158.33\text{Forecast for July} = \frac{145 + 160 + 170}{3} = \
frac{475}{3} \approx 158.33

Answer:
The forecasted demand for July is approximately 158 units using a 3-month moving average.

Problem 2: Exponential Smoothing (Quantitative Method)


Problem Statement:
A store uses exponential smoothing to forecast monthly demand.
The smoothing constant α=0.3\alpha = 0.3.
The actual demand in January was 200 units, and the forecast for January was 190 units.
Question:
What is the forecast for February using exponential smoothing?

Solution:
Exponential Smoothing Formula:
Ft+1=αAt+(1−α)FtF_{t+1} = \alpha A_t + (1 - \alpha) F_t
Where:
 Ft+1F_{t+1} = forecast for February
 AtA_t = actual demand in January = 200
 FtF_t = forecast for January = 190
 α=0.3\alpha = 0.3
FFeb=0.3(200)+0.7(190)=60+133=193F_{Feb} = 0.3(200) + 0.7(190) = 60 + 133 = 193

Answer:
The forecasted demand for February is 193 units using exponential smoothing.

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