Question: To solve this problem, I will: Compute the three - period and four - period moving averages for weeks 5 , 6 , and 7

To solve this problem, I will:
Compute the three-period and four-period moving averages for weeks 5,6, and 7.
Calculate the mean absolute deviation (MAD) for each forecasting method to determine which is more accurate.
Use the more accurate method to forecast week 8.
Three-Period Moving Average:
Week 5 forecast =(27+31+19)/3=25.67
Week 6 forecast =(31+19+17)/3=22.33
Week 7 forecast =(19+17+21)/3=19
Four-Period Moving Average:
Week 5 forecast =(21+27+31+19)/4=24.5
Week 6 forecast =(27+31+19+17)/4=23.5
Week 7 forecast =(31+19+17+21)/4=22
Calculating MAD for Three-Period:
|Forecast Error|=|Actual - Forecast|
Week 5: |19-25.67|=6.67
Week 6: |17-22.33|=5.33
Week 7: |21-19|=2
MAD =(6.67+5.33+2)/3=4.67
Calculating MAD for Four-Period:
Week 5: |19-24.5|=5.5
Week 6: |17-23.5|=6.5
Week 7: |21-22|=1
MAD =(5.5+6.5+1)/3=4.33
The four-period moving average has a lower MAD of 4.33, so it is the more accurate forecasting method.
To forecast week 8 using the four-period method:
Week 8 forecast =(19+17+21+ X)/4
Where X is the actual sales for week 7, which we don't know.
So using just the known sales data:
Week 8 forecast =(19+17+21)/3=19
Therefore, using the more accurate four-period moving average method, the forecast for week 8 sales is 19 cases.

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