Question 1 In this exercise you should calculate three types of averages, the absolute forecast error and the mean absolute deviation (MAD) and explain the accuracy.

1. Calculate the moving average for 3 months.
2. Calculate the weighted moving average (WMA) for 3 months.
3. Calculate the forecast using exponential smoothing.
4. Calculate the absolute forecast error for each method
5. Calculate the MAD for each method.
6. Determine which method is the most accurate and explain why

Weighting assumptions:

• Month 1 = 0.5
• Month 2 = 0.3
• Month 3 = 0.2

Smoothing constant = 0.35

Month	1	2	3	4	5	6	7	8	9	10
	Historical Actual Values	Moving Average (3 month)	WMA (3 month)	ExpSmth Sm consant = 0.35	Absolute forecast error	MAD	Absolute forecast error	MAD	Absolute forecast error	MAD
January	1000
February	1450
March	1289
April	1374
May	1500
June	1654
July	1700
Total

Question 1b - Which of the forecasts is the most accurate and why?