Question

Sales of tablet computers at Ted Glickman's electronics store in Washington,D,C., over the past 10 weeeks are shown in the table below:

Week Damand

1 20

2 21

3 28

4 37

5 25

6 29

7 36

8 22

9 25

10 28

a)Forecast demand for each week, including week 10, using exponential smoothing with a=0.5 (initial forecast=20)

b)Compute the MAD

c)Compute the tracking signal

Answer 1

Smoothing Factor		0.5
	Week 1	Week 2	Week 3	Week 4	Week 5	Week 6	Week 7	Week 8	Week 9	Week 10	Total
Demand(D)	20	21	28	37	25	29	36	22	25	28
Forecast(F)	20	20	20.5	24.25	30.625	27.8125	28.40625	32.20313	27.10156	26.05078
D - F	0	1	7.5	12.75	-5.625	1.1875	7.59375	-10.2031	-2.10156	1.949219	14.05078
|D - F|	0	1	7.5	12.75	5.625	1.1875	7.59375	10.20313	2.101563	1.949219	49.91016
MAD											4.991016
Tracking Signal											2.815215

Formulae :

1. Forecast = (((1 - smoothing factor) * Most recent period forecast) + (Smoothing factor * most recent periods' demand)

2. MAD =

where N = Number of period ( Here its 10)

3. Tracking Signal =

Example:

Week 1, Forecast = 20 (given in question)

Week 2, Forecast = (((1 - 0.5) * 20) + (0.5 * 20)) = 20

Week 3, Forecast = ((( 1 - 0.5) * 20) + (0.5 * 21)) = 20.5

........

MAD = (49.91016/ 10) = 4.991016

Tracking Signal = (14.05078 / 4.991016) = 2.815215