Question: A. Olde World's sales manager must make purchasing plans for the private-label products Olde World sells. One of the items the company stocks is SunPro,

A. Olde World's sales manager must make purchasing plans for the private-label products Olde World sells. One of the items the company stocks is SunPro, an add-on that customers buy to spray on their windows and doors for UV protection. The sales of this item are seasonal, with peaks in the spring, summer, and fall months. Demand (in cases) for the past 12 months at Olde World is listed in the following table.

Month

Sales

Month

Sales ($)

January

2,000

July

5,000

February

2,800

August

5,400

March

3,200

September

6,000

April

3,900

October

5,000

May

4,300

November

3,800

June

4,900

December

3,300

  1. Based on the numbers in the table above, forecast the sales (by month) from March through December using a 2-month weighted moving average. Use the weights of .75 and .25, giving more weight to recent data.

  1. Forecast the sales for the months of March through December using exponential smoothing with = 0.7, beginning with an initial forecast in January of $3,000 and starting error measurement in March.

  1. Using the mean absolute deviation (MAD-Measurement of the dispersion of forecast errors)as your performance criterion (with error measurement beginning in March), compare the two forecasting methods you used in A and B. Which method would you recommend as a more reliable predictor? Why?

  1. Using the mean absolute percent error (MAPE - Measurement relating to the forecast error to the level of demand))as your performance criterion (with error measurement beginning in March), compare the two forecasting methods you used in A and B. Which method would you recommend as a more reliable predictor? Why?

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