OPER1401

Operations Management I
Forecasting
Please answer the following question. Show all your work on the sheets provided.
1. Forecast using Exponential Smoothing with a smoothing constant = .40
Year
1
2
3
4
5
6
7

Charter
Flights
60
62
64
60
65
67

Forecast
55
57.00
59.00
61.00
60.60
62.36
64.22

Absolute
Error
5.00
5.00
5.00
1.00
4.40
4.64

0.4

F2 =
F3 =
F4 =
F5 =
F6 =
F7 =

55 + (0.4 x (60 - 55))

57 + (0.4 x (62 - 57))
59 + (0.4 x (64 - 59))
61 + (0.4 x (60 - 61))
60.6 + (0.4 x (65 - 60.6))
62.36 + (0.4 x (67 - 62.36))

25.04
/6
M.A.D. =

4.17
0.75

2. Forecast using Exponential Smoothing with a smoothing constant = .75

Charter
Absolute
Year
Flights
Forecast
Error
1
60
55
5.00
2
62
58.75
3.25
F2 =
55 + (.75 x (60 - 55 ))
3
64
61.19
2.81
F3 =
58.75 + (.75 x (62 - 58.75))
4
60
63.30
3.30
F4 =
61.19 + (.75 x (64 - 61.19 ))
5
65
60.82
4.18
F5 =
63.3 + (.75 x (60 - 63.3 ))
6
67
63.96
3.04
F6 =
60.82 + (.75 x (65 - 60.82 ))
7
66.24
F7=
63.96 + (.75 x (67 - 63.96 ))
21.58
M.A.D. =
3.60
/ 6

3. Forecast using a 3 Year Moving Average

Year
1
2
3
4
5
6
7

Charter
Flights
60
62
64
60
65
67

M.A.D. =

Forecast
n/a
n/a
n/a
62.00
62.00
63.00
64.00
3.00

Absolute
Error
n/a
n/a
n/a
2.00
3.00
4.00

Year
1
2
3
4
5
6
7

M.A.D. =

Forecast
n/a
n/a
61.60
63.60
60.80
64.00
66.60
3.30

(64+62+60)/3
(60+64+62)/3
(65+60+64)/3
(67+65+60)/3

9.00
/3

4. Forecast using a 2 Year Weighted Moving Average

Charter
Flights
60
62
64
60
65
67

F4 =
F5 =
F6 =
F7=

Absolute
Error
n/a
n/a
2.40
3.60
4.20
3.00
13.20
/ 4

Weights
P1
P2

F3=
F4=
F5=
F6=
F7=

0.8
0.2
1

(.8 x 62)+(0.2 x 60)

(.8 x 64)+(0.2x 62)
(.8 x 60)+(0.2 x 64)
(.8 x 65)+(0.2 x 60)
(.8 x 67)+(0.2 x 65)

5. Forecast for periods 8 and 11 using a Trend Projection

Y
x
Charter
Year
Flights
x2
xy
1
60
1
60
2
62
4
124
3
64
9
192
b=
1343 - (6 x 3.5 x 63)
4
60
16
240
91 - ( 6 x (3.5 x 3.5))
5
65
25
325
6
67
36
402
a=
63 - (1.14 x 3.5)
3.5
63
91
1343
Forecasting Equation
b=
1.14
F(x) =
59 + 1.14 x
a=

59.00

F(8) =
F (11)=

68.12
71.54

Using M.A.D. as the criterion, which of the first four forecasting methods is best?
Forecast

Forecast #3 is best

#1
#2
#3
#4

M.A.D.
4.17
3.60
3.00
3.30
3.00

7. Forecast using a Linear Regression (causal) model. You are the recruiting officer for a
local college. You believe the probability a student may graduate relates to the score they
achieve on a first year entry math test. What will be your forecast of probability of
graduation for a student who scores 6.2 on their math test?

X
math score
8.6
7.5
6.8
7.3
8.2
7.2
7.60
b=

Y
probability
of graduating
91
80
66
78
85
86
81.00

3717 - (6 x 7.6 x 81)

348.82 - (6 x (7.6 x 7.6))

b=
math score
6
6.1
6.2
6.3
6.4

x2
73.96
56.25
46.24
53.29
67.24
51.84
348.82

forecast
64.43
65.47
66.50
67.54
68.58

10.35

xy
782.6
600
448.8
569.4
697
619.2
3717.00
a=

81.00 - (10.35 x 7.60)

a=

2.31

With a math score of 6.2 the student has a 66.5 %

probability of graduating.