DECISION SCIENCE

■USE OF PROBABILISTIC
MODELS TO SOLVE REAL
WORLD PROBLEMS:

➔ FORECASTING

1
SIMPLE MOVING AVERAGES

13
SIMPLE MOVING AVERAGES
■ W.R.T. the 3 – week simple moving
average:
❑ Forecast for Week 4 is:
17 + 21 + 19 = 57 = 19
3 3
■ W.R.T. the 6 – week simple moving average:
❑ Forecast for Week 7 is
17 + 21 + 19 + 23 + 18 + 16 = 114 = 19
6 6

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MOVING AVERAGES - GRAPH

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 SIMPLE MOVING
AVERAGES
1.
CHARACTERISTICS
Different moving averages produce different
forecasts
2. The greater the number of periods, the greater the
smoothing effect.
3. If the underlying trend of the past data is thought
to be fairly constant with substantial randomness,
then a greater number of periods should be
chosen, and vice versa.

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USING EXCEL ADD-IN TO DEVELOP
THE REGRESSION MODEL
SUMMARY OUTPUT- STEPS
■ Execute the Excel Programme
■ Input data for x and y
■ Click on Tools
■ Click on Add ins
■ Tick Analysis ToolPak
■ Click Ok
■ Click on Tools
■ Click on Data Analysis
■ Click on Regression and Ok
■ Fill in the required data and Ok.
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DATA FOR RUNNING THE
REGRESSION MODEL IN EXCEL
X Y

24 12

25 17

32 20

36 21

39 26

44 28

47 31

50 33

61 36

73 40
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SUMMARY OUTPUT

Regression Statistics
PMCC
Multiple R 0.968206

Coefficient of
R Square 0.937422
Determination
Adjusted R Square 0.9296

Standard Error 2.357307

Observations 10

ANOVA
  df SS MS F
Regression 1 665.94 665.94 119.84

Residual 8 44.455 5.5569

Total 9 710.4   
  Coefficients Standard Error t Stat P-value
Intercept 2.473506 2.3093 1.0711 0.3154
X Variable 1 0.555139 0.0507 10.947 4E-06
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