1. The manager of the Carpet City outlet needs to make an accurate forecast of the demand for Soft Shag carpet (its biggest seller). If the manager does not order enough carpet from the carpet mill, the customer will buy their carpet from one of Carpet City’s many competitors. The manager has collected the following demand data for the past 8 months:

a. Compute a 3-month moving average forecast for months 4 through 9.

b. Compute a weighted 3-month moving average forecast for months 4 through 9. Assign weights of 0.55, 0.35, and 0.10 to the months in sequence, starting with the most recent month.

c. Compare the two forecasts by using MAD. Which forecast appears to be more accurate?

Carpet City
	Month	Demand for Soft Shag Carpet (1,000 yds.)	3 mos moving average forecast	Weighted 3 mos moving average forecast		Error abs()	Error abs()
	1	10
	2	9
	3	8
	4	9
	5	10
	6	12
	7	14
	8	11
	9
				Please apply weights stated in the problem	Weights: 0.55 (most recent month), 0.35, 0.10
	Compute MAD on 3 mos moving average			Note: average over month 4 through 8 only. No data available to month 9
	Compute MAD on weighted 3 mos moving average			Note: average over month 4 through 8 only. No data available to month 9
	Which is a better forecast method?

Answer rating: 100% (QA)

Carpet City Month Demand for Soft Shag Carpet 1000 yds 3 mos moving average forecast ... View the full answer