Sales of iPhone 6 have been going well for a local electronic store. These sales

Question

Sales of iPhone 6 have been going well for a local electronic store. These sales for the past fourteen weeks are shown below:

a) Use exponential smoothing constant of 0.2 to forecast the sales of iPhone6i. Assuming the forecast for week 1 is 35 iphone 6s. What is the MAD of the model?

b) Forecast the sales for week 15 using a 5-week weighted moving average. Use 5,4,3,2, and 1 for the weights of the most recent, second most recent, third most recent, fourth most recent and fifth most recent periods, respectively. What is the MAD of the model? What is the forecast value for week 15?

c) Would you prefer to use the exponential smoothing model or the 5-week weighted model? Explain your answer.

Week Sales 1 35 2 36 3 30 4 23 5 38 6 15 7 20 8 27 9 18 10 24 11 30 12 32 13 34 14 36

Explanation / Answer

The mean absolute deviation for exponential smoothing is giving a smaller absolute deviation value, which means it is a better forecast value. Thus, exponential smoothing might be preferred over weighted average method in this case.

Hope this helps. ask if you have any doubts

alpha = 0.2 Week Sales Forecast MAD Exponential Wt. Average Exponential Wt. Average 1 35 35 0.00 2 36 35.000 1.00 3 30 35.200 5.20 4 23 34.160 11.16 5 38 31.928 6.07 6 15 33.142 31.933 18.14 16.933 7 20 29.514 26.133 9.51 6.133 8 27 27.611 23.333 0.61 3.667 9 18 27.489 23.933 9.49 5.933 10 24 25.591 21.733 1.59 2.267 11 30 25.273 21.867 4.73 8.133 12 32 26.218 24.933 5.78 7.067 13 34 27.375 27.667 6.63 6.333 14 36 28.700 30.267 7.30 5.733 15 30.160 33.067 MAD 6.23 6.91

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