Chapter $4$ Forecasting Assignment

$($YOU MUST SHOW ALL OF YOUR WORK$)$

You are the owner of a franchise that sells mobile phones. Below is a chart showing sells for the past $10$ months. You want to start forecasting future sells but not sure which forecast method is best. To help you with this decision you decided to use the data below to calculate forecasts using $3$ different methods $($moving average, weighted moving average and exponential smoothing$).$ You will determine which of the forecasts is best using the MAPE calculation to see which of the forecast is most accurate. The most accurate forecast would have the smallest MAPE.

Use the outline below to do your forecasts.

Months Sales

$122$

$221$

$325$

$427$

$535$

$629$

$733$

$837$

$941$

$1037$

a$)$ Calculate a $2-$month moving average forecast through month $10.$ You should have $8$ forecasts when you are done.

b$)$ Calculate a $3-$month weighted moving average through month $10$ with weights of $3,2,$ and $1$ with the highest weights given to the most recent data to make them more significant. You should have $7$ forecasts.

c$)$ Calculate the exponential smoothing for the above data using smoothing constants of $\mathrm{.}1,\mathrm{.}3$ and $\mathrm{.}5.$ Use $20$ as the forecast for month $1.$ You will calculate $9$ months of forecasts.

d$)$ Calculate the MAPE for each of the $5$ forecasts. For the exponential smoothing, you will use $10$ forecasts for your MAPE calculations, because month $1$ was given to you.

e$)$ Which of the five forecast methods $(2-$month moving average, $3-$month weighted moving average, exponential smoothing of $\mathrm{.}1,\mathrm{.}3$ or $\mathrm{.}5)$ is best based on the MAPE calculation.

ADDED TIP: Look at the video example that is posted in blackboard on how to do the exponential smoothing calculations. You can copy my spreadsheet and populate it with the data from above. Excel is the best tool for doing this assignment.

REMEMBER: SHOW ALL YOUR WORK.