1. Show all your work. 2. Do not use any Excel-Add-ins or POM software programs.
ID: 428900 • Letter: 1
Question
1. Show all your work.
2. Do not use any Excel-Add-ins or POM software programs.
3. Round off all answers to 2 decimal positions.
PLEASE DO NOT ANSWER IN EXCEL I NEED TO SEE THE FORMULAS AND CALCULATIONS TO UNDERSTAND. THANK YOU.
Given the data below:
Month Demand for Soft Shag Carpet (1000 yd.)
1 5
2 10
3 6
4 8
5 14
6 10
7 9
8 12
Compute a three-month moving average forecast for months 4 thru 9.
Compute a weighted three-month moving average for months 4 thru 9. Assign weights of 0.55, 0.33 and 0.12 to the months in sequence, starting with the most recent month.
Compare the two forecasts using MAD. Which forecast appears to be more accurate?
Explanation / Answer
1.
3 month moving average for month 4 = (demand for week 1 + demand for week 2 + demand for week 3)/3
3 month moving average for month 4 = (5+10+6)/3 = 7
3 month moving average for month 5 = (10+6+8)/3 = 8
3 month moving average for month 6 = (6+8+14)/3 = 9.33
3 month moving average for month 7 = (8+14+10)/3 = 10.67
3 month moving average for month 8 = (14+10+9)/3 = 11
3 month moving average for month 9 = (10+9+12)/3 = 10.33
2.
3 month weighted moving average for month 4 = (.12*demand for week 1 + .33*demand for week 2 + .55*demand for week 3)
3 month weighted moving average for month 4 = (.12*5 + .33*10 + .55*6) = 7.2
3 month weighted moving average for month 5 = (.12*10 + .33*6 + .55*8) = 7.58
3 month weighted moving average for month 6 = (.12*6 + .33*8 + .55*14) = 11.06
3 month weighted moving average for month 7 = (.12*8 + .33*14 + .55*10) = 11.08
3 month weighted moving average for month 8 = (.12*14 + .33*10 + .55*9) = 9.93
3 month weighted moving average for month 9 = (.12*10 + .33*9 + .55*12) = 10.77
3.
MAD for 3 month moving average = ((8-7) + (14-8) + (10-9.33) + (10.67-9) + (12-11))/5
MAD for 3 month moving average = 2.068
MAD for 3 month weighted moving average = ((8-7.2) + (14-7.58) + (11.06-10) + (11.08-9) + (12-9.93))/5
MAD for 3 month weighted moving average = 2.486
MAD for 3 month moving average is more accurate, because it has relatively smaller value.
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