National Scan, Inc., sells radio frequency inventory tags. Monthly sales for a s

Question

National Scan, Inc., sells radio frequency inventory tags. Monthly sales for a seven-month period were as follows:

A linear trend equation.(Round your intermediate calculations and final answer to 2 decimal places.)

A five-month moving average. (Round your answer to 2 decimal places.)

Exponential smoothing with a smoothing constant equal to .30, assuming a March forecast of 20(000). (Round your intermediate forecast values and final answer to 2 decimal places)

A weighted average using .60 for August, .20 for July, and .20 for June. (Round your answer to 2 decimal places.)

National Scan, Inc., sells radio frequency inventory tags. Monthly sales for a seven-month period were as follows:

Explanation / Answer

1. Linear trend, by least squares fit:
b = (n * xy – x*y)/(n * x^2 - (x)^2) = 1.21
a = (y – b*x)/n = 14.64,
where x is month number, 2, 3, … 8;
y is score – monthly sales.
For September, x = 9
So forecast is 14.64 + 1.21 * 9 = 25.53 (thousand).

2. 5-month moving average: use months April to August to estimate September.
Estimate = 106/5 = 21.2

3. New smoothed value = 0.7 * old forecast + 0.3 * new observation
month fcst obs
Mar 19 19
Apr 19 12
May 16.9 28
Jun 20.23 16
Jul 18.96 22
Aug 19.87 28
Sep 22.31


4. Naive:
Either average of all observations, = 145 / 7 = 20.71
or the last observation: 28

5. Weighted average (of last 3 months)
0.7 + 0.1 + 0.2 = 1.0 OK
0.7 * 28 + 0.1 * 22 + 0.2 * 16 = 25.00
0.8

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