Ilagan, Rosebelle

Toshiba Philippines carries a line of electric iron. Given the following monthly data:

MONTH Sales (000 units)

January 25
February 20
March 18
April 23
May 26
June 24
July 22
August 25
September 20

1. Compute for the three-month and five-month moving average

MONTH Sales (000 units) 3-month moving average 5-month moving average
January 25 - -
February 20 - -
March 18 - -
April 23 18 + 20 +25 / 3 = 21 -
May 26 23 + 18 + 20 / 3 = 20 -
June 24 26 + 23 + 18 / 3 = 22 26 + 23 + 18 + 20 + 25 / 5 = 22
July 22 24 + 26 + 23 / 3 = 24 24 + 26 + 23 + 18 + 20 / 5 = 22
August 25 22 +24 +26 / 3 = 24 22 + 24 + 26 + 23 + 18 / 5 = 23
September 20 25 + 22 + 24 / 3 = 23 25 + 22 + 24 + 26 + 23 / 5 = 24

2. Forecast October sales volume using the following:

a. Exponential smoothing with a smoothing constant equation, alpha (a) = 0.20.

MONTH SALES (000 FORECAST

UNITS)
July 22 (0.20) (24) + (0.80) (22) = 22.40
August 25 (0.20) (22) + (0.80) (22.40) = 22.32
September 20 (0.20) (25) + (0.80) (22.32) = 22.86
October (0.20) (20) + (0.80) (22.86) = 22.29
Ilagan, Rosebelle

b. An electrical contractor’s record’s during the last five weeks indicate the number of
job requests, exponential smoothing with a = 0.30:

MONTH REQUESTS FORECAST

1 30 -
2 35 -
3 32 -
4 28 32 + 35 + 30 / 3 = 32
5 36 28 + 32 + 35 / 3 = 32
6 (0.30) (3.6) + (0.70) (32) = 33.2

c. Dry cleaner uses exponential smoothing to forecast usage of equipment in its main
plant. August forecast was 93%; actual usage was 88.6% of capacity. Forecasts use a
smoothing constant of 0.10.

Prepare a forecast for September:

MONTH ACTUAL FORECAST

August 88.6% 93%
September (0.10) (88.6%) + (0.90) (93%) =
92.56%