MGT 312

Chapter 9 Forecasting : Moving Averages & Time Series

Moving Averages

Two-week
Absolute Squared
Week Sales Units Average Error
Deviation Error
Forecast

1 246
2 256
3 255 251 4 4 16
4 248 255.5 -7.5 7.5 56.25
5 263 251.5 11.5 11.5 132.25
6 254 255.5 -1.5 1.5 2.25 MAD = 5.269
7 256 258.5 -2.5 2.5 6.25 MSE = 44.558
8 258 255 3 3 9
9 249 257 -8 8 64
10 257 253.5 3.5 3.5 12.25
11 259 253 6 6 36
12 243 258 -15 15 225
13 255 251 4 4 16
14 251 249 2 2 4
15 253 253 0 0 0
16 252

Sales Forecast Sales Units

Two-week Average Forecast
265

260

255

250
Units

245

240

235

230
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Week

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 MGT 312

Moving Averages

four-week
Absolute Squared
Week Sales Units Average Error
Deviation Error
Forecast

1 246
2 256
3 255
4 248
5 263 251.25 11.75 11.75 138.0625
6 254 255.5 -1.5 1.5 2.25 MAD = 4.705
7 256 255 1 1 1 MSE = 38.892
8 258 255.25 2.75 2.75 7.5625
9 249 257.75 -8.75 8.75 76.5625
10 257 254.25 2.75 2.75 7.5625
11 259 255 4 4 16
12 243 255.75 -12.75 12.75 162.5625
13 255 252 3 3 9
14 251 253.5 -2.5 2.5 6.25
15 253 252 1 1 1
16 250.5

Sales Units
Sales Forecast Two-week Average Forecast
four-week Average Forecast
265

260

255

250
Units

245

240

235

230
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Week
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 230
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Week MGT 312

Exponential Smoothing

Smoothing
Week Sales Units Error
Averages

1 246
2 256
3 255 251.000 4.000 a = 0.25
4 248 252.000 -4.000
5 263 251.000 12.000
6 254 254.000 0.000
7 256 254.000 2.000
8 258 254.500 3.500
9 249 255.375 -6.375
10 257 253.781 3.219
11 259 254.586 4.414
12 243 254.586 -11.586
13 255 251.689 3.311
14 251 252.517 -1.517
15 253 252.138 0.862
16 252.353

Sales Forecast Sales Units

Smoothing Averages

265

260

255

250
Units

245

240

235

230
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Week Page 3 of 11
230
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
MGT 312
Week

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 MGT 312
Time-Series : Additive model

Year Quarter Passengers Moving Average Deviation Seasonal component Seasonally Adjusted
I 9337 -3305.06 12642.06
II 13335 673.87 12661.13
1995 III 16545 12741.63 3803.38 4474.16 12070.84
IV 11287 12886.88 -1599.88 -1842.97 13129.97
I 10262 12921.25 -2659.25 -3305.06 13567.06
II 13572 13024.50 547.50 673.87 12898.13
1996 III 16583 13215.63 3367.38 4474.16 12108.84
IV 12075 13477.50 -1402.50 -1842.97 13917.97
I 11003 13842.25 -2839.25 -3305.06 14308.06
II 14926 14161.63 764.38 673.87 14252.13
1997 III 18147 14401.25 3745.75 4474.16 13672.84
IV 13066 14691.63 -1625.63 -1842.97 14908.97
I 11929 15091.50 -3162.50 -3305.06 15234.06
II 16323 15464.88 858.13 673.87 15649.13
1998 III 19949 15757.25 4191.75 4474.16 15474.84
IV 14251 16017.25 -1766.25 -1842.97 16093.97
I 13083 16281.50 -3198.50 -3305.06 16388.06
II 17249 16537.38 711.63 673.87 16575.13
1999 III 21137 16717.50 4419.50 4474.16 16662.84
IV 15110 16963.63 -1853.63 -1842.97 16952.97
I 13665 17337.75 -3672.75 -3305.06 16970.06
II 18636 17654.00 982.00 673.87 17962.13
2000 III 22743 17849.13 4893.88 4474.16 18268.84
IV 16034 17822.00 -1788.00 -1842.97 17876.97
I 14302 17745.75 -3443.75 -3305.06 17607.06
II 17782 17607.50 174.50 673.87 17108.13
2001 III 22987 17434.63 5552.38 4474.16 18512.84
IV 14684 17565.00 -2881.00 -1842.97 16526.97
I 14269 17744.50 -3475.50 -3305.06 17574.06
II 18858 18041.75 816.25 673.87 18184.13
2002 III 23347 18404.13 4942.88 4474.16 18872.84
IV 16702 18585.75 -1883.75 -1842.97 18544.97
I 15150 18804.00 -3654.00 -3305.06 18455.06
II 19430 19090.25 339.75 673.87 18756.13
2003 III 24521 19391.88 5129.13 4474.16 20046.84
IV 17818 19825.50 -2007.50 -1842.97 19660.97
I 16447 20308.50 -3861.50 -3305.06 19752.06
II 21602 673.87 20928.13
2004 III 26213 4474.16 21738.84
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 2004
MGT 312

I II III IV
1995 3803.38 -1599.875
1996 -2659.250 547.500 3367.375 -1402.500
1997 -2839.250 764.375 3745.750 -1625.625
1998 -3162.500 858.125 4191.750 -1766.250
1999 -3198.500 711.625 4419.500 -1853.625
2000 -3672.750 982.000 4893.875 -1788.000
2001 -3443.750 174.500 5552.375 -2881.000
2002 -3475.500 816.250 4942.875 -1883.750
2003 -3654.000 339.750 5129.125 -2007.500
Adjustement
2004 -3861.500 Seasons Average
Value

Mean -3329.67 649.27 4449.56 -1867.57 -98.41 -24.60

Seasonal Components -3305.06 673.87 4474.16 -1842.97 0.00

Time-Series
Passengers
Seasonally Adjusted
30000

25000

20000
Passengers

15000

10000

5000

0
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
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 0
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III
MGT 312
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Time-Series : Multiplicative model

Year Quarter Passengers Moving Average Deviation Seasonal component Seasonally Adjusted
I 9337 0.7997 11676.3521
II 13335 1.0404 12817.3306
1995 III 16545 12741.63 1.2985 1.2744 12982.6854
IV 11287 12886.88 0.8759 0.8861 12738.2550
I 10262 12921.25 0.7942 0.7997 12833.1075
II 13572 13024.50 1.0420 1.0404 13045.1302
1996 III 16583 13215.63 1.2548 1.2744 13012.5036
IV 12075 13477.50 0.8959 0.8861 13627.5742
I 11003 13842.25 0.7949 0.7997 13759.7624
II 14926 14161.63 1.0540 1.0404 14346.5675
1997 III 18147 14401.25 1.2601 1.2744 14239.7577
IV 13066 14691.63 0.8894 0.8861 14745.9945
I 11929 15091.50 0.7904 0.7997 14917.7684
II 16323 15464.88 1.0555 1.0404 15689.3354
1998 III 19949 15757.25 1.2660 1.2744 15653.7679
IV 14251 16017.25 0.8897 0.8861 16083.3589
I 13083 16281.50 0.8036 0.7997 16360.8990
II 17249 16537.38 1.0430 1.0404 16579.3878
1999 III 21137 16717.50 1.2644 1.2744 16585.9789
IV 15110 16963.63 0.8907 0.8861 17052.8071
I 13665 17337.75 0.7882 0.7997 17088.7170
II 18636 17654.00 1.0556 1.0404 17912.5440
2000 III 22743 17849.13 1.2742 1.2744 17846.1900
IV 16034 17822.00 0.8997 0.8861 18095.6128
I 14302 17745.75 0.8059 0.7997 17885.3151
II 17782 17607.50 1.0099 1.0404 17091.6965
2001 III 22987 17434.63 1.3185 1.2744 18037.6542
IV 14684 17565.00 0.8360 0.8861 16572.0330
I 14269 17744.50 0.8041 0.7997 17844.0471
II 18858 18041.75 1.0452 1.0404 18125.9258
2002 III 23347 18404.13 1.2686 1.2744 18320.1424
IV 16702 18585.75 0.8986 0.8861 18849.5026
I 15150 18804.00 0.8057 0.7997 18945.7785
II 19430 19090.25 1.0178 1.0404 18675.7206
2003 III 24521 19391.88 1.2645 1.2744 19241.3677
IV 17818 19825.50 0.8987 0.8861 20108.9951
I 16447 20308.50 0.8099 0.7997 20567.7372
2004 Page 7 of 11
 II 21602 1.0404 20763.4028 MGT 312
2004 III 26213 1.2744 20569.0621

I II III IV
1995 1.2985 0.8759
1996 0.7942 1.0420 1.2548 0.8959
1997 0.7949 1.0540 1.2601 0.8894
1998 0.7904 1.0555 1.2660 0.8897
1999 0.8036 1.0430 1.2644 0.8907
2000 0.7882 1.0556 1.2742 0.8997
2001 0.8059 1.0099 1.3185 0.8360
2002 0.8041 1.0452 1.2686 0.8986
2003 0.8057 1.0178 1.2645 0.8987
Adjustement
2004 0.8099 Seasons Average
Value

Mean 0.79965 1.04039 1.27439 0.88607 4.00050 1.00012

Seasonal Components 0.79955 1.04026 1.27423 0.88596 4.00000

Time-Series
Passengers
Seasonally Adjusted
30000

25000

20000
Passengers

15000

10000

5000

0 Page 8 of 11
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
5000

MGT 312
0
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Page 9 of 11
 Two-week
Absolute Squared
Week Sales Units Average Error
Deviation Error
Forecast

1 32
2 34
3 35 33 2 2 4
4 33 34.5 -1.5 1.5 2.25
5 36 34 2 2 4 MAD = 1.417
6 35 34.5 0.5 0.5 0.25 MSE = 2.292
7 37 35.5 1.5 1.5 2.25
8 35 36 -1 1 1
9 36

Sales Forecast Sales Units

Two-week Average Forecast
four-week Average Forecast
38

37

36

35

34
Units

33

32

31

30

29
1 2 3 4 5 6 7 8 9
Week

Moving Averages

four-week
Absolute Squared
Week Sales Units Average Error
Deviation Error
Forecast

1 32
2 34
3 35
4 33
5 36 33.5 2.5 2.5 6.25
6 35 34.5 0.5 0.5 0.25 MAD = 1.375
7 37 34.75 2.25 2.25 5.0625 MSE = 2.906
8 35 35.25 -0.25 0.25 0.0625
9 35.75
 Exponential Smoothing

Smoothing Smoothing
Week Sales Units Average Error Average Error
a = 0.2 a = 0.5

1 32
2 34
3 35 33.0000 2.0000 33.0000 2.0000 a = 0.2
4 33 33.4000 -0.4000 34.0000 -1.0000 a = 0.5
5 36 33.3200 2.6800 33.5000 2.5000
6 35 33.8560 1.1440 34.7500 0.2500
7 37 34.0848 2.9152 34.8750 2.1250
8 35 34.6678 0.3322 35.9375 -0.9375
9 34.7343 -34.7343 35.4688 -35.4688

Sales Forecast Sales Units

Smoothing Average a = 0.2

Smoothing Average a = 0.5

38.0000

37.0000

36.0000

35.0000

34.0000
Units

33.0000

32.0000

31.0000

30.0000

29.0000
1 2 3 4 5 6 7 8 9
Week