Question

An electrical contractor's records during the last five weeks indicate the number of job requests:

Week:	1	2	3	4	5
Requests:	25	27	25	26	27

Predict the number of requests for week 6 using each of these methods:

a. Naive.

Number of requests            

b. A four-period moving average. (Round your answer to 2 decimal places.)

Number of requests            

c. Exponential smoothing with α = .25. Use 25 for week 2 forecast. (Round your intermediate forecast values and final answer to 2 decimal places.)

	Number of Requests
F3
F4
F5
F6

Answer 1

a)

Number of requests for week 6 = 27

Naive forecasting technique assumes that the forecast in the next period is equal to the forecast in the most recent period.

Recent period is 5, and number of requests for period 5 is 27. Hence forecast for period 6 is 27.

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b)

Using a four period moving average, forecast for period 6 is found as

Forecast for period 6 = 27 + 25 + 26 + 27 -= 26.25

Number of requests week 6 = 26.25

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c)

The exponential smoothing forecast is found using the following equation

F_t+1 = $\alpha$ Y_t + ( 1 - $\alpha$ ) F_t

Forecast for week 3 = 0.25 $\times$ 27 + ( 1 - 0.25) $\times$ 25

Forecast for week 3 = 25.5

Forecast for week 4 = 0.25 $\times$ 25 + (1 - 0.25) $\times$ 25.5

Forecast for week 4 = 25.38

Forecast for week 5 = 0.25 $\times$ 26 + ( 1 - 0.25) $\times$ 25.38

Forecast for week 5 = 25.54

Forecast for week 6 = 0.25 $\times$ 27 + ( 1 - 0.25) $\times$ 25.54

Forecast for week 6 = 25.91

	Number of requests
F3	25.50
F4	25.38
F5	25.54
F5	25.91