Problem 2 An electrical contractor's records during the last five weeks indicate the number of job requests. Week 1 2 3 4 5 Requests 20 21 22 (Actual) 22 18 Predict the number of requests for week 6 using each of these methods. a. Nave forecast method b. A four-period moving average Concept: Naive forecast uses a single previous value of a time series as the basis of a forecast. This can be used with a stable series (variations around an average). with seasonal variations, or with the trend. With a stable series, the last data point becomes the forecast for the next period. Formula: Ft-At-1 F = Forecast for period t A-1= Actual demand or sales for the previous period. 1 2 3 4 5 6 Week Requests (Actual) 20 22 18 21 22 na 2 3 4 5 Forecast Nave 6 Concept A moving average forecast uses a number of the most recent actual data values in generating a forecast using a moving average (MA) of 4. Formula .. 77 71 F = MA, where F = Forecast for time period ! MA, = period moving average A = Actual value in period 1 - 1 n= Number of periods in the moving avetage 1 2 3 4 ON 5 6 Week Requests (Actual) 20 22 18 CO 21 22 na 1 2 3 a Forecast Naive Period moving average To calculate the moving average for Week 6, we use the Average function in Excel for four periods (weeks 2 5). Formula is: = Average (22. 18, 21, 22)