Question

The manager of the Petroco Service Station wants to forecast the demand for unleaded gasoline next month so that the proper number of gallons can be ordered from the distributor. The owner has accumulated the following data on demand for unleaded gasoline from sales during the past 10 months:

Months	Demand
October	800
November	725
December	630
January	500
February	645
March	690
April	730
May	810
June	1200
July	980

Compute the following:

a- MA3

b- MA4

c- WMA3 (0.5, 0.3, 0.2)

d- Exponential Smoothing forecast (α=0.3)

e- Adjusted Exponential Smoothing forecast (α=0.3, β=0.2)

Part 2

Using MAD, determine which of these five forecasts is more accurate.

Answer 1

a)

Months	Demand	Forecast	Error	abs(error)
October	800
November	725
December	630
January	500	718.3333	-218.333	218.3333
February	645	618.3333	26.66667	26.66667
March	690	591.6667	98.33333	98.33333
April	730	611.6667	118.3333	118.3333
May	810	688.3333	121.6667	121.6667
June	1200	743.3333	456.6667	456.6667
July	980	913.3333	66.66667	66.66667
Total				1106.667
MAD				158.0952

b.

c.

d.

e.

F(t) = FIT(t-1) + alpha*(A(t-1) - FIT(t-1) )

T(t) = T(t-1) + beta * (F(t) - FIT(t-1) )

FIT(t) = F(t) +T(t)

Part - 2

Using MAD c- WMA3 (0.5, 0.3, 0.2) is best as it has lowest MAD