Tutorial 3 Forecasting Q&A

Question 1
National sells radio. Monthly sales as follows:

Month Sales ‘000

Jan 19
Feb 18
Mar 15
Apr 20
May 18
Jun 22
Jul 20

Forecast August sales volume using:

a) A linear least square method (regression analysis)
b) A five-month moving average
c) Exponential smoothing with a smoothing constant equal to .20, assuming a February
forecast of 19 (=19000 units)
d) The naïve approach

Answer:
a) 20860
b) 19000
c) 19256
d) 20000

Question 2
A dry cleaner company uses exponential smoothing to forecast equipment sales (in million).
August sales forecast was 88; actual sales was 89.6. A smoothing constant of .1 is used.
a) Prepare a forecast for September
b) Assuming actual September sales is 92, prepare a forecast for October sales

Answer:
a) 88.16
b) 88.544

Question 3
An electrical contractor’s records during the last five weeks indicate the number of jobs requests:
 WEEK 1 2 3 4 5
REQUEST 20 22 18 21 22

Predict the number of request for week 6 using:

a) Naïve
b) A four-period moving average
c) Exponential smoothing with α=0.30. Use 20 for week 2 forecast.

Answer:
a) 22
b) 20.75
c) 20.72

Question 4
The manager of a seafood restaurant was asked to establish a pricing policy on lobster dinners.
Experimenting with prices produced the following data:

Average no.
sold per day Price, $
200 6
190 6.5
188 6.75
180 7
170 7.25
162 7.5
160 8
155 8.25
156 8.5
148 8.75
140 9
133 9.25

a) Determine the regression line

Answer:
a) Y=316.33-19.56X