QUESIIO You have just been hired at the local beer distributor and your new boss

Question

QUESIIO You have just been hired at the local beer distributor and your new boss, Jesus, asks you to calculate and decide between two different forecasting methods for beer: the weighted average and exponential smoothing. Based on Jesus's experience, he suggested the following weights (most recent first) using the weighted average method for four periods: 0.40, 0.30, 0.20, and 0.10. He suggested using an alpha of .25 with exponential smoothing for comparison. You tell Jesus that you can do that with no problem and can produce a forecast based on previous demand using both methods. Based on these data, which method, weighted averaging or exponential smoothing do you recommend that should Jesus use? (Hint: calculate and complete the table below and calculate the MAPE using the data for periods 6 and Z.) Important: Round the forecast of demand to the nearest whole number. Enter forecast as ### or #,###. Round percentage error for each period to 2 digits (eg 05.12%) before calculating MAPE. 0

Explanation / Answer

Weighted Average:

Exp smoothening:

The highlighted ones are the solution.

Year Sales Forecast AD PE 1 703 2 688 688 3 720 720 4 779 779 5 821 46.1 6 759 774.90 18.7 2.46% 7 875 777.70 55.2 6.31% 819.80 558.3 4.39% MAD MAPE

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