PLEASE SHOW ALL STEPS - DO NOT USE A SPREADSHEET OR SOFTWARE TO DO THIS. I HAVE
ID: 462202 • Letter: P
Question
PLEASE SHOW ALL STEPS - DO NOT USE A SPREADSHEET OR SOFTWARE TO DO THIS.
I HAVE TO DO THIS BY HAND. NO COMPUTER ALLOWED.
Given the following monthly demand data:
Month Demand
Jan 55
Feb 52
Mar 57
Apr 64
May 58
June 54
July 62
Aug
A. Compute forecast for May, June, July and August using 3-month moving average.
B. Compute forecast for May, June, July and August using exponential smoothing with a=0.3. Assume forecast for March is 60.
C. Using rounded forecasts for May, June,and July. Compute MAE and MAPE for the above two methods.Based on MAE ad MAPE, which forecasting method provides more accurate forecasts.
Explanation / Answer
A) The moving average forecast for the month of May = (52 + 57 + 64) / 3
May forecast = 57.67
June forecast = ( 57 + 64 + 58) / 3
June forecast = 59.67
July forecast = ( 64 + 58 + 54) / 3
July forecast = 58.67
August forecast = ( 58 + 54 + 62) / 3
August forecast = 58
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Exponential smoothing
The forecasted value for the month of April = 0.3 X 57 + ( 1-0.3) X 60
April forecast = 59.10
May forecast = .3 X 64 + 0.7 X 59.10
May forecast = 60.57
June forecast = 0.3X 58 + 0.7 X 60.57
June forecast = 59.799
July forecast = 0.3 X 54 + 0.7 X 59.799
July forecast = 58.059
August forecast = 0.3 X 62 + 0.7 X 58.059
August forecast = 59.24
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C)
MAPE for moving average = ( 0.5689 + 10.5 + 5.37) / 3
MAPE for moving average = 5.5796 %
MAPE for exponential smoothing = (7.65 + 4.43 + 10.73 + 6.35) / 4
MAPE for exponential smoothing = 7.29%
MAE for moving average = ( 0.33 + 5.67 + 3.33) / 3
MAE for moving average = 3.11
MAE for exponential smoothing = ( 4.9 + 2.57 + 5.799+3.941) /4
MAE for exponential smoothing = 4.3025
Bases on MAE and MAPE , moving average method provides more accurate forecasts
Month Demand Forecasted demand(Moving average) MAE(Moving average) MAPE ( moving average) MAPE ( moving average) Forecasted value exponential smoothing MAE(exponential smoothing) MAPE(exponential smoothing) MAPE(exponential smoothing) Jan 55 Feb 52 March 57 April 64 59.1 4.9 0.0765625 7.65625 May 58 57.67 0.33 0.005689655 0.568965517 60.57 2.57 0.044310345 4.431034483 June 54 59.67 5.67 0.105 10.5 59.799 5.799 0.107388889 10.73888889 July 62 58.67 3.33 0.053709677 5.370967742 58.059 3.941 0.063564516 6.356451613 August 58 59.24Related Questions
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