United Dairies, Inc. supplies milk to independent grocers in Collier County, Florida. Milk is perishable so forecast accuracy is critical in predicting the number of gallons of milk sold per month. Sales data in gallons for the past twelve months is shown in Exhibit 9.17 (these data are available in the worksheet United Dairies Case Data in MindTap). The demand indicates a seasonal pattern

because in the winter months (months 1 to 3 and 12) the population of the county increases dramatically as people from the northern United States, Canada, and Europe spend their winters there to avoid the harsh weather.

Case Questions for Discussion:

1. What moving average or exponential smoothing model would you recommend to forecast demand? Clearly show your results and explain your conclusions.

2. What might the economic impact be of over or under forecasting here for this perishable commodity?

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EXHIBIT 9.17 United Dairies Milk Demand (gallons) Milk (gallons) Month 1 2 WN 3 4 5 6 7 8 9 10 11 12 3,750 3,480 3,450 3,000 2,900 3,050 2,750 2,520 2,800 3,000 3,200 3,240