(20) Problem 8/Ch 11, p.278. At the ABC Floral Shop, an argument developed betwe
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(20) Problem 8/Ch 11, p.278. At the ABC Floral Shop, an argument developed between two of the owners, Bob and Henry, over the accuracy of forecasting methods. Bob argued that exponential smoothing with a = .1 would be the best method. Henry argued that the shop would get a better forecast with a =.3.
Calculate forecasts of the product using a three and five periods moving average, and graph the forecasts and demand using excel.
< > Using F1 =100 and the data, which of the two managers is right? You must provide detailed reasoning to support your answer.
Day 1 demand=200
day 2 demand= 134
day3 demand =147
day4 demans =165
day5 demand =183
day 6 demand =125
day 7 demand =146
day 8 demand= 154
day 9 demand = 182
day 10 demand = 197
day 11 demand = 132
day 12 demand = 163
day 13 demand = 157
day 14 demand = 169
Explanation / Answer
based on 3 period moving averages, the estimated demand will be:
day4= 200+134+147= 481/3= 160
D5= 134+147+165= 446/3= 149
D6= 147+165+183= 495/3=165
D7= 165+183+125= 473/3=158
D8= 183+125+146= 454/3=151
D9= 125+146+154= 425/3= 142
D10=146+154+182= 482/3=161
D11= 154+182+197=533/3=178
D12= 182+197+132=511/3=170
D13=197+132+163=492/3=164
D14= 132+163+157=452/3=151
D15=163+157+169=489/3=163
Based on 5 period moving average the estimated demands are
D6= 200+134+147+165+183= 829/5=166
D7= 134+147+165+183+125=754/5=151
D8=147+165+183+125+146=774/5=154
D9=165+183+125+146+154=773/5=155
D10=183+125+146+154+182=790/5=158
D11=125+146+154+182+197=804/5=161
D12= 146+154+182+197+132=811/5=162
D13=154+182+197+132+163=828/5=166
D14=182+197+132+163+157=841/5=168
D15=197+132+163+157+168=817/5163
Usually the higher moving average will be better one, in this example also 5 period moving average is better.
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