Question

Consider the sales data for Computer Success given in Problem 7.

A. Use a 3-month weighted moving average to forecast the sales for the months April through December. Use weights of (4/8), (3/8), and (1/8), giving more weight to more recent data.

B. Use exponential smoothing with α=0.6 α = 0.6 to forecast the sales for the months April through December. Assume that the initial forecast for January was $3,200 $ 3,200 . Start error measurement in April.

C. Compare the performance of the two methods by using the mean absolute deviation as the performance criterion, with error measurement beginning in April. Which method would you recommend?

D. Compare the performance of the two methods by using the mean absolute percent error as the performance criterion, with error measurement beginning in April. Which method would you recommend?

E. Compare the performance of the two methods by using the mean squared error as the performance criterion, with error measurement beginning in April. Which method would you recommend?

Month	Sales ($$)	Month	Sales ($$)
January	3,000	July	6,300
February	3,400	August	7,200
March	3,700	September	6,400
April	4,100	October	4,600
May	4,700	November	4,200
June	5,700	December	3,900

Please answer all WITHOUT using Excel and show all work. Thank you!

Answer 1

Answer

Conclusion: comparing the error measures of both the methods, it can be said that exponential smoothing forecast approach with a=0.6 provide better forecast results as compared to the weighted average approach. Because, error values determined from exponential smoothing forecast is smaller than the values determined with weighted moving average method.

(Working note:

*Error =

= (Actual sales - forecast sales)

*Absolute error

= positive error (non negative)

* Mean absolute percentage error:

= (absolute error * 100)/actual sales

* Mean squared error

= Error ²

Hope it helps you. I have given all the calculations and clear answer. Please like the answer it will encourage me )