Sales for the past 12 months at XYZ Company are given here. Months Sales ($ millions) Months
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Question:
Sales for the past 12 months at XYZ Company are given here.
Months | Sales ($ millions) | Months | Sales ($ millions) |
January | 20 | July | 53 |
February | 24 | August | 62 |
March | 27 | September | 54 |
April | 31 | October | 36 |
May | 37 | November | 32 |
June | 47 | December | 29 |
Tasks:
1. Use a 3-month weighted moving average to forecast the sales for the months April through December. Use weights of (3/6), (2/6), and (1/6), giving more weight to more recent data.
2. Use exponential smoothing with α = 0.6 to forecast the sales for the months April through December. Assume that the initial forecast for January was $22 million. Start error measurement in April.
3. Compare the performance of the two methods by using the mean absolute deviation (MAD) as the performance criterion, with error measurement beginning in April. Which method would you recommend?
Related Book For
Operations Management Processes and Supply Chains
ISBN: 978-0133872132
11th edition
Authors: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
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