NAIVE FORECASTING METHOD

The JAV Department Store has been an authorized dealer of LPG for the past
years. The table below shows the demand from the past.

PERIOD DEMAND
January 21
February 25
March 29
April 21
May 25
June 20
July 18
August 21
September 20
October 19
November 18
December 15
January of the next year ?

Forecast the demand for January of the following year.

Answer: 15
SIMPLE MOVING AVERAGE FORECASTING METHOD

The JAV Department Store has been an authorized dealer of LPG for the past
years. The table below shows the demand from the past.

PERIOD DEMAND
January 21
February 25
March 29
April 21
May 25
June 20
July 18
August 21
September 20
October 19
November 18
December 15
January of the next year ?

Forecast the demand for January using 4 – months moving

average.

Answer: (15+18+19+20)/4 = 18
WEIGHTED MOVING AVERAGE FORECASTING METHOD

The JAV Department Store has been an authorized dealer of LPG for the past
years. The table below shows the demand from the past.

PERIOD DEMAND
January 21
February 25
March 29
April 21
May 25
June 20
July 18
August 21
September 20
October 19
November 18
December 15
January of the next year ?

Forecast the demand for January using 3 – months

weighted moving average

Answer: {(15X3)+(18X2)+(19X1)}/6 = 16.67

SIMPLE EXPONENTIAL SMOOTHING FORECASTING METHOD
The JAV Department Store has been an authorized dealer of LPG for the past
years. The table below shows the demand from the past.

PERIOD ACTUAL DEMAND FORECAST

1 20 -
2 35 20.00
3 46 23.00
4 40 27.60
5 50 ?

Forecast the demand for Period % using exponential

smoothing with smoothing constant = 0.20
F3 = F3-1 + a (A3-1 - F3-1)
F3 = F2 + 0.20 (A2 – F2) F4 = F3 + 0.20 (A3 – F3)
F3 = 20 + 0.20 (35 – 20) F4 = 23 + 0.20 (46 – 23)
F3 = 20 + 0.20 (15) F4 = 23 + 0.20 (23)
F3 = 20 + 3 F4 = 23 + 4.6
F3 = 23 F4 = 27.6

F5 = F4 + 0.20 (A4 – F4)

F5 = 27.6 + 0.20 (40 – 27.6)
F5 = 27.6+ 0.20 (12.4)
F5 = 27.6 + 2.48
F5 = 30.08
TREND LINE FORECASTING

The total sales of television sets of a Manila-based firm over the last 10 weeks is
shown in the following table. Plot the data, and visually check if a linear trend line
would be appropriate. Then determine the equation. Then determine the equation
of the line and predict the sales for weeks 11 and 12.

WEEK(t) UNIT SALES(y)

1 800
2 810
3 830
4 820
5 850
6 810
7 825
8 840
9 805
10 830

Yt = a + bt

N=10

n Σty −Σt Σy
b= 2
n Σ t −¿ ¿
Σy−bΣt
a=
n

(Σt) (Σy) Σty Σt^2

1 800 800 1

2 810 1620 4

3 830 2490 9

4 820 3280 16
 5 850 4250 25

6 810 4860 36

7 825 5775 49

8 840 6720 64

9 805 7245 81

10 830 8300 100

55 8220 45,340 385

b = (10)(45340) - (55)(8220) a = 8220 - (1.5758)(55)

(10)(385) - (55)^2 10

453400-452100 8220-86.66666

3850-3025 10

1300 8133.333333

825 10

b = 1.5758 a= 813.33

Yt = a + bt
Yt = 813.33 + 1.5758(t)

Y11 = Yt = 813.33 + 1.5758(11) Y11= 830.67

Y12 = Yt = 813.33 + 1.5758(12) Y12= 832.24

Given: Gasoline Sales of LEONIDA (weekly). Compute for the week 11 sales using the trend line
forecasting.

(Σt) (Σy) Σty Σt^2

1 13,000 13000 1

2 18,000 36000 4

3 19,000 57000 9

4 16,000 64000 16

5 17,000 85000 25

6 15,000 90000 36

7 14,000 98000 49

8 19,000 152000 64

9 20,000 180000 81

10 16,500 165000 100

55 167,500 940000 385

b
= 10(940000) - (55)(167500) a= 167500 - (227.2727*55)
10(385) - (55^2) 10
187500 = 15500.0000
= 825
= 227.2727

Yt = a + bt
Y= 15500 + (227.2727*11)
Y= 17999.9997/18000.00
LINEAR REGRESSION

The manager of a seafood restaurant was asked to establish a pricing policy on

lobster dinners. Experimenting with prices produced the following data:

Number of lobsters Price, X(pesos)

sold per day, Y
250 600
220 650
200 630
230 580
180 620
210 610
240 590

a. Using the simple linear regression, obtain the linear regression equation.
b. Obtain y, when the price is P595.

Y= a + bX

(Σx) (Σy) Σxy Σx^2

600 250 150000 360000

650 220 143000 422500

630 200 126000 396900

580 230 133400 336400

620 180 111600 384400

610 210 128100 372100

590 240 141600 348100

4280 1530 933700 2620400

 (1530)(2620400) - (4280)(933700) (7) (933700) - (4280)(1530)
a= b=
7 (2620400) - (4280)^2 (7)(2620400) - (4280)

4,009,212,000 - 3,996,236,000 6,535,900 – 6,548,400

18,342,800 – 18,318,400 18,342,800 – 18,318,400

12,976,000 -12,500

24,400 24,400

a b
= 531.80 = -0.512295082

Y= a + bX

Y = 531.80+(-0.5123)X

Y= 531.80+(-0.5123)(595)

Y = 226.98
CAT Comp has the following information with regards advertising expense
and sales:

Advertising (x) Sales(y)

500,000 1,700,000
400,000 1,250,000
350,000 1,150,000
420,000 1,800,000
475,000 2,150,000

Using the data given and if advertising expense will be 520,000, the
forecasted sales is?

(Σx) (Σy) Σxy Σx^2

500,000 1,700,000 850,000,000,000 250,000,000,000
400,000 1,250,000 500,000,000,000 160,000,000,000
350,000 1,150,000 402,500,000,000 122,500,000,000
420,000 1,800,000 756,000,000,000 176,400,000,000
475,000 2,150,000 1,021,250,000,000 225,625,000,000
2,145,000 8,050,000 3,529,750,000,000 934,525,000,000

(61,000*1,434,000,000) - 6(956000000)-
a = (92000*956,000,000) b = (92000*61000)
6(1,434,000,000)-(92000^2) 6(1434000000)- (92000^2)

= -48,387,500,000,000,000 = 381,500,000,000
71,600,000,000 71,600,000,000
-675,803.0726 5.3282

Y= a + bX
Y = -675,803.0726+5.3282(520,000)
Y = 2,094,867.32