Question

Problem 3 - Quarterly demand of a spare part for a certain aircraft engine during the last two years (in sequence) is 250, 200, 180, 190, 225, 285, 305, and 190. Determine the forecasts for periods 3 to 9 using 2 period moving averages (MA-2) and Exponential smoothing with α = 0.2 and α = 0.4 (i.e. ES (0.2) and ES (0.4)). For ES (0.2) and ES (0.4) calculations, assume that the forecast for period 2 was 250.

Compare MAD, MSE and MAPE for the forecasts from period 3 to 8. Which forecasting method has been more accurate?

(Round the answers to 2 decimal places. No need to completely round the answers to units).

Period	Demand
1	250
2	200
3	180
4	190
5	225
6	285
7	305
8	190
9

(12 Marks)

Answer 1

PLEASE RATE POSITIVE IF YOU LIKE THE ANSWER. THIS WILL ENCOURAGE MY FUTURE EMPLOYMENT

Formulas for moving average

Formulas for exponential smoothening

Summary

Summary
Method	MAD	MSE	MAPE
2 month moving average	52.92	3,859.38	0.24
ES=0.2	49.24	2,924.30	0.22
ES=0.4	51.25	3,141.53	0.23

Exponential smoothening with a smoothening constant of 0.2 yields the best forecast since MAD, MSE and MAPE are least for this method