ASSIGNMENT ON FORECASTING

The data on the tables below are the demand in dozens of doughnuts of Mrs. Doughnuts for the past six
weeks, make a forecast for week 7 using two week moving average, exponential smoothing with an
alpha of 0.10, and linear trend.

Exponential Smoothing here, alpha = 0.10 2-week moving average here -------

Period Actual Forecast Absolute Error Forecast Absolute Error

Demand

Week 300
1

Week 400 300 100

2 (400-300)

Week 250 310 60 350 100

3 (400*.10)+(300*.90) (310-250) (300+400/2) (350-250)

Week 212 304 92 325 113

4 (250*.10)+(310*.90) (304-212) (400+250/2) (212-325)

Week 210 294.80 84.80 231 21

5 (212*.10)+(304*.90) (210-294.80) (250+212/2) (210-231)

Week 190 286.32 96.32 211 21

6 (210*.10)+(294.80*.90) (286.32-190) (212+210/2) (190-211)

Week 276.69   200  

7 (190*.10)+(286.32*.90) (210+190/2)

Total 433.12 255

(100+60+92+84.80+96.32) (100+113+21+21)

Mean Absolute 86.624 86.624 63.75

Error (MAD (433.12/5) (255/4)

--- Perform linear trend here

Period x Actual demand (y) xy x2

Week 1 1 300 300 1

Week 2 2 400 800 4

Week 3 3 250 750 9

 Week 4 4 212 848 16

Week 5 5 210 1050 25

Week 6 6 190 1140 36

Total 21 1526 4888 91

Answer the following question. Use your solution above in answering.

1. What is your forecast for week 7 using 2 week moving

average? 200

2. What is your forecast for week 7 using exponential

smoothing? 276.69

3. Which is the better forecasting technique for the data,

moving average or exponential smoothing? Moving Average

4. Using the two-week moving average, what period did your

forecast start? Week 3

5. If a three-week moving average is used, what period must

you start your forecast? Week 4

6. In exponential smoothing, to what did you multiply the

alpha of 0.10, actual demand or forecast? Actual Demand

7. Given weights of 0.60 (most recent), 0.20 and 0.20 for the
preceding periods respectively, what is the forecast for week 198.40
7 using weighted moving average?

8. What is the linear trend equation? y=370.15+(-33.09)x

9. What does your slope (b) indicate, increasing or
decreasing demand? Decreasing

10. Using linear trend, what is the forecast for week 7? 138.52

7. Weighted Moving Average: (0.60*190)+(0.20*210)+(0.20*212) = 198.40

9. slope (b)= [n(total xy) – (total x)(total y)]/[n(total x^2)- (total x)^2] =
[6(4888) – (21)(1562)]/[6(91)- (21)^2]
=(29328-32802)/(546-441)
= -3474/105
= -33.09

Intercept (a)=[total y-(b*total x)]/n

=1526-(-33.09 x 21)/6
=1526-(-694.89)/6
=370.15

10. y=(370.15+(-33.09)*7) = 138.52