ao) Upper management has asked you to join the Demand Planning Team. This team h

Question

ao) Upper management has asked you to join the Demand Planning Team. This team has been tasked with testing three different forecasting algorithm: Simple Exponential Smoothing Weighted Moving Average and Simple Moving Average. APE SMAIEI 336 315 294 315 343 378 Part 1. Calculate a forecast for each of the algorithm using the following parameters. (20 Points) Simple Exponential Smoothing (SES) Initial Forecast (F3) = 315 "alpha .0.3 3 period moving average Simple Moving Average (SMA): "Initial Forecast (F3) = 315 3 period moving-average Weighted Moving Average (WMA) * M1=.60, M2-.30, & M3-..10 art 2. Calculate the mean absolute percent error (MAPE) for each forecasting algorithm. Which forecasting procedure would you select? Why? (15 points)

Explanation / Answer

Month Sales SES SES_Dev SES_Abs_Dev MAPE_SES SMA SMA_Dev SMA_Abs_Dev MAPE_SMA WMA WMA_Dev WMA_Abs_Dev MAPE_WMA 1 315 2 336 3 294 315 -21 21 7.14% 315 -21 21 7.14% 315 -21 21 7.14% 4 322 308.7 13.3 13.3 4.13% 317.3333333 4.666666667 4.666666667 1.45% 322 0 0 0.00% 5 343 312.69 30.31 30.31 8.84% 319.6666667 23.33333333 23.33333333 6.80% 307.3 35.7 35.7 10.41% 6 378 321.783 56.217 56.217 14.87% 347.6666667 30.33333333 30.33333333 8.02% 333.9 44.1 44.1 11.67% 7 329 338.6481 -9.6481 9.6481 2.93% 350 -21 21 6.38% 352.1 -23.1 23.1 7.02% 7.58% 5.96% 7.25% MAPE: SES 7.58 WMA 7.25 SMA 5.96 Best to follow because it has the lowest MAPE amongst the three

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