Consider the usage of item # 14-46-506: 4 ft. Supersaver fluorescent lamps in Sterling Pulp Chemicals (now part of ERGO Worldwide) in the first 10 months of 2008.
Month 2008
Jan……………………10
Feb……………………10
Mar……………………66
Apr……………………32
May……………………34
June……………………18
July……………………24
Aug……………………9
Sep……………………14
Oct……………………48
Fit a model to the data using each of the following techniques and forecast the November usage in each case. Also, plot the two moving average forecasts and the actual, the two exponential smoothing forecasts and the actual, and the linear trend and the actual (three graphs altogether).
a. Three-month moving average.
b. Five-month moving average.
c. Exponential smoothing with smoothing constant = 0.1.
d. Exponential smoothing with smoothing constant = 0.3.
e. Linear trend (regression).
f. Just by observing the plots, which of the above techniques would you use to forecast tire usage of fluorescent lamps and why? (Hint: the plot overall closest to actual demand will be most accurate).
g. Alternatively, compute the MAD for each forecasting technique and determine the most accurate technique.