Problem 3-29 Two independent methods of forecasting based on judgment and experi

Question

Problem 3-29 Two independent methods of forecasting based on judgment and experience have been prepared each month for the past 10 months The forecasts and actual sales are as follows Month Sales Forecast 1 772 792 793 775 Forecast 2 772 791 793 775 790 794 776 772 770 761 774 792 794 2 4 7 8 9 10 774 764 773 792 795 775 761 772 791 796 a. Compute a tracking signal for the 10th month for each forecast using the cumulative error for months 1 to 10, Use action limits of ± 4 Is there bias present? (Do not round your intermediate calculations. Round your answers to 2 decimal places. Negative amounts should be indicated by a minus sign.) Tracking Signal Bias Forecast Method 1 Method 2 (Click to select) Click to select b. Compute 2s control limits for each forecast. (Do not round your intermediate calculations. Round your answers to 2 decimal places.) Control Limits Forecast Method 1 Method 2

Explanation / Answer

Part1

Month Sales F1 Bias=F1-Sales MAD1=Absolute value of bias F2 Bias=F2-Sales MAD2=Absolute value of bias 1 771 772 1 1 772 1 1 2 790 792 2 2 791 1 1 3 794 793 -1 1 793 -1 1 4 776 775 -1 1 775 -1 1 5 772 771 -1 1 771 -1 1 6 770 774 4 4 775 5 5 7 761 764 3 3 761 0 0 8 774 773 -1 1 772 -2 2 9 792 792 0 0 791 -1 1 10 794 795 1 1 796 2 2 Total 7 1.5 3 1.5 Bias Forecast-Demand forecast error=Mean absolute Error(MAD) Bias1 7 Bias 2 3 Tracking signal 1 Bias1/MAD1 4.7 Tracking signal 2 Bias2/MAD2 2

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