Bruce is a street vendor selling T-shirts in New York city. His sales in past te

Question

Bruce is a street vendor selling T-shirts in New York city. His sales in past ten weeks are listed as below. Weeks Sales 1 33 2 31 3 31 4 37 5 40 6 33 7 50 8 45 9 55 10 60 (1) Bruce wants to prepare for future sales. Please make forecast, based on historical data, for sales in week 11 and 12, using the following methods: moving average (3), moving average (4), moving average (5), exponential smoothing (0.1), exponential smoothing (0.4), exponential smoothing (0.8). Compare “the mean absolution deviation (MAD)” and “Forecast error” among these methods.

Explanation / Answer

WE HAVE BEEN GIVEN THE SALE OF 10 WEEKS

1 33

2 31

3 31

4 37

5 40

6 33

7 50

8 45

9 55

10 60

NOW WE NEED TO PREDICT THE SALES FOR 11 AND 12TH WEEK

1) MOVINF AVERAGE OF 3

FOR 11TH WEEK WE WILL TAKE LAST 3 WEEKS AVERAGE = (45+55+60)/3 = 53.3

FOR 12TH WEEK = (55+60+53.3)/3 = 56.1

2) MOVING AVERAGE OF 4

FOR 11TH WEEK WE WILL TAKE 4 WEEK AVERAGE = (50+45+55+60)/4 = 52.5

FOR 12TH WEEK = (45+55+52.5+60)/4 = 53.12

3) MOVING AVERAGE 0F 5

FOR 11TH WEEK WE WILL TAKE 5 AVERAGE = (33+50+45+55+60)/5 = 48.6

FOR 12 WEEK = (50+45+55+60+48.6)/5 = 51.72

4)(D*S)+(F*(1-S))

Where

D = most recent period’s demand
S = the smoothing factor represented in decimal form (so 35% would be represented as 0.35).
F = the most recent period’s forecast (the output of the smoothing calculation from the previous period).

FOE 11TH WEEK WITH FACTOR = 0.1

11TH WEEK = 60*0.1+(0.9)*55 = 55.5

12TH WEEK = 60*0.1+(0.9)*55.5 = = 55.95

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