Question

The owner of At the Beach is forecasting this month's (October's) demand for a new tanning booth based on the historical data given below.

Month	Number of Visits
April	100
May	140
June	110
July	150
August	120
September	160

a) What is this month’s forecast using the naïve approach?

b) What is this month’s forecast using a three-month simple moving average?

c) What is this month's forecast using a four-month weighted moving average with weights of .4, .3, .2, and .1?

d) What is this month's forecast using exponential smoothing with alpha = .2, if August's forecast was 145?

Answer 1

1	B	C	D	E	F
2	Month	Number of Visits	Forecast using Naïve approach	Forecast using three month simple moving average	Forecast using four month weighted moving average
3	April	100
4	May	140	100
5	June	110	140
6	July	150	110	116.67
7	August	120	150	133.33	131
8	September	160	120	126.67	129
9	October		160	143.33	141
10
11	Month	Number of Visits	Forecast using Exponential Smoothing
12	April	100
13	May	140
14	June	110
15	July	150
16	August	120	145
17	September	160	140
18	October		144

Formula:

1	B	C	D	E	F
2	Month	Number of Visits	Forecast using Naïve approach	Forecast using three month simple moving average	Forecast using four month weighted moving average
3	April	100
4	May	140	=C3
5	June	110	=C4
6	July	150	=C5	=AVERAGE(C3:C5)
7	August	120	=C6	=AVERAGE(C4:C6)	=(0.4*C6)+(0.3*C5)+(0.2*C4)+(0.1*C3)
8	September	160	=C7	=AVERAGE(C5:C7)	=(0.4*C7)+(0.3*C6)+(0.2*C5)+(0.1*C4)
9	October		=C8	=AVERAGE(C6:C8)	=(0.4*C8)+(0.3*C7)+(0.2*C6)+(0.1*C5)
10
11	Month	Number of Visits	Forecast using Exponential Smoothing
12	April	100
13	May	140
14	June	110
15	July	150
16	August	120	145
17	September	160	=(0.2*C16)+(0.8*D16)
18	October		=(0.2*C17)+(0.8*D17)

Answer 2

1	B	C	D	E	F
2	Month	Number of Visits	Forecast using Naïve approach	Forecast using three month simple moving average	Forecast using four month weighted moving average
3	April	100
4	May	140	100
5	June	110	140
6	July	150	110	116.67
7	August	120	150	133.33	131
8	September	160	120	126.67	129
9	October		160	143.33	141
10
11	Month	Number of Visits	Forecast using Exponential Smoothing
12	April	100
13	May	140
14	June	110
15	July	150
16	August	120	145
17	September	160	140
18	October		144

Formula:

1	B	C	D	E	F
2	Month	Number of Visits	Forecast using Naïve approach	Forecast using three month simple moving average	Forecast using four month weighted moving average
3	April	100
4	May	140	=C3
5	June	110	=C4
6	July	150	=C5	=AVERAGE(C3:C5)
7	August	120	=C6	=AVERAGE(C4:C6)	=(0.4*C6)+(0.3*C5)+(0.2*C4)+(0.1*C3)
8	September	160	=C7	=AVERAGE(C5:C7)	=(0.4*C7)+(0.3*C6)+(0.2*C5)+(0.1*C4)
9	October		=C8	=AVERAGE(C6:C8)	=(0.4*C8)+(0.3*C7)+(0.2*C6)+(0.1*C5)
10
11	Month	Number of Visits	Forecast using Exponential Smoothing
12	April	100
13	May	140
14	June	110
15	July	150
16	August	120	145
17	September	160	=(0.2*C16)+(0.8*D16)
18	October		=(0.2*C17)+(0.8*D17)