You have taken over the finance function of a large and successful outdoor gear store that sells primarily camping equipment such as tents, cooking gear, backpacks, and other smaller items. The owner of this store wants to get a better handle on the variation of sales of tents over the course of the year. She asks you to develop a process by which sales forecasts of tents can be made with more reliability. Up to now, there has not been a systematic process in place for forecasting tent sales, she just looked at what sales were each month, and estimated what she thought they might be in the future, based purely on her intuition. You decide to create a table for three forecasting methods to illustrate each approach to the store owner, compute the forecast for January 20, and provide an indication of which approach is best.

1. Given the information in the table, compute the January 2020 forecasts for each method. Place your answer in the appropriate box or write the January 2020 forecasts for each method below.
2. 
   
3. What forecasting model would you report to the store owner as the most effective? How did you determine this? Show any computations necessary and put the answers in the appropriate boxes or write your answers in the space below.

 

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Wi = .2; W2 = .3; W3 = 5. Weighted Moving Average 3-Moving Average Actual Difference a = .3 Exponential Smoothing Actual Difference Month/ Actual Absolute Deviation Actual Absolute Absolute Year Sales Forecast Forecast Difference Deviation Forecast Deviation Oct 18 1400.00 Nov 18 1500.00 Dec '18 Jan '19 1800.00 1600.00 1700.00 1566.67 133.33 233.33 1630.00 70.00 70.00 1660.00 40.00 40.00 Feb 19 1500.00 1666.67 -166.67 166.67 1690.00 -190.00 190.00 1672.00 -172.00 172.00 Mar '19 1500.00 1666.67 -166.67 266.67 1620.00 -120.00 120.00 1620.40 -120.40 120.40 Apr '19 May '19 1500.00 1566.67 -66.67 33.33 1540.00 -40.00 40.00 1584.28 -84.28 84.28 1600.00 1500.00 100.00 133.33 1500.00 100.00 100.00 1559.00 41.00 41.00 1533.33 1600.00 June '19 1700.00 166.67 200.00 1550.00 150.00 150.00 1571.30 128.70 128.70 July '19 Aug '19 Sept '19 1800.00 200.00 200.00 1630.00 170.00 170.00 1609.91 190.09 190.90 1900.00 1700.00 200.00 200.00 1730.00 170.00 170.00 1666.94 233.06 233.06 1700.00 1800.00 -100.00 100.00 1830.00 -130.00 130.00 1736.85 -36.85 36.85 80.00 60.00 Oct '19 1700.00 1800.00 -100.00 100.00 1780.00 -80.00 1725.80 -25.80 25.80 Nov '19 1800.00 1766.67 33.33 33.33 1740.00 60.00 1718.06 81.94 81.94 Dec '19 1900.00 1733.33 166.67 166.67 1750.00 150.00 150.00 1742.64 157.36 157.36 Jan '20 Total n Mean 0000 C TTTTT TIT| Wi = .2; W2 = .3; W3 = 5. Weighted Moving Average 3-Moving Average Actual Difference a = .3 Exponential Smoothing Actual Difference Month/ Actual Absolute Deviation Actual Absolute Absolute Year Sales Forecast Forecast Difference Deviation Forecast Deviation Oct 18 1400.00 Nov 18 1500.00 Dec '18 Jan '19 1800.00 1600.00 1700.00 1566.67 133.33 233.33 1630.00 70.00 70.00 1660.00 40.00 40.00 Feb 19 1500.00 1666.67 -166.67 166.67 1690.00 -190.00 190.00 1672.00 -172.00 172.00 Mar '19 1500.00 1666.67 -166.67 266.67 1620.00 -120.00 120.00 1620.40 -120.40 120.40 Apr '19 May '19 1500.00 1566.67 -66.67 33.33 1540.00 -40.00 40.00 1584.28 -84.28 84.28 1600.00 1500.00 100.00 133.33 1500.00 100.00 100.00 1559.00 41.00 41.00 1533.33 1600.00 June '19 1700.00 166.67 200.00 1550.00 150.00 150.00 1571.30 128.70 128.70 July '19 Aug '19 Sept '19 1800.00 200.00 200.00 1630.00 170.00 170.00 1609.91 190.09 190.90 1900.00 1700.00 200.00 200.00 1730.00 170.00 170.00 1666.94 233.06 233.06 1700.00 1800.00 -100.00 100.00 1830.00 -130.00 130.00 1736.85 -36.85 36.85 80.00 60.00 Oct '19 1700.00 1800.00 -100.00 100.00 1780.00 -80.00 1725.80 -25.80 25.80 Nov '19 1800.00 1766.67 33.33 33.33 1740.00 60.00 1718.06 81.94 81.94 Dec '19 1900.00 1733.33 166.67 166.67 1750.00 150.00 150.00 1742.64 157.36 157.36 Jan '20 Total n Mean 0000 C TTTTT TIT|

Answer rating: 100% (QA)

a 3Moving Average method Period Demand Forecast Error Absolute Squared Abs Pct Err Period 1 1400 Period 2 1500 Period 3 1800 Period 4 1700 1566667 133... View the full answer