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Forecasting Exercises 1 11102024 102248am

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6 views16 pages

Forecasting Exercises 1 11102024 102248am

Uploaded by

Rimsha Malik
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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CHAPTER 4

FORECASTING

EXERCISES AND SOLUTIONS


-MOVING AVERAGE
-WEIGHTED MOVING AVERAGE
-EXPONENTIAL SMOOTHING
-FORECASTING ERRORS
MOVING AVERAGE
A n-month moving average is the sum of the observed values during the past n months
divided by n. Moving Average Method n =3

Month Sales Forecast Calculation


1 100
2 80
3 90
4 110 90.00 =(100+80+90)/3
5 100 93.33 =(80+90+110)/3
6 110 100.00 =(90+110+100)/3
7 95 106.67 =(110+100+110)/3
8 115 101.67 =(100+110+95)/3
9 120 106.67 =(110+95+115)/3
10 90 110.00 =(95+115+120)/3
11 105 108.33 =(115+120+90)/3 2

12 110 105.00 =(120+90+105)/3


WEIGHTED MOVING AVERAGE (USING
MONTHLY DEMANDS)
Forecast (April) = 0.2*(Demand Jan) + 0.3*(Demand Feb) + 0.5*(Demand
March)
Weight
Weighted Moving Average Method n=3
s
1=0.2
2=0.3
Month Sales Forecast Calculation 3=0.5
1 100
2 80
3 90
4 110 89.00 = 0.2*100 + 0.3*80 + 0.5*90/1
5 100 98.00 = 0.2*80 + 0.3*90 + 0.5*110/1
6 110 101.00 = 0.2*90 + 0.3*110 + 0.5*100/1
7 95 107.00 = 0.2*110 + 0.3*100 + 0.5*110/1
8 115 100.50 = 0.2*100 + 0.3*110 + 0.5*95/1
9 120 108.00 = 0.2*110 + 0.3*95 + 0.5*115/1 3
10 90 113.50 = 0.2*95 + 0.3*115 + 0.5*120/1
11 105 104.00 = 0.2*115 + 0.3*120 + 0.5*90/1
EXPONENTIAL SMOOTHING
Ft = Ft – 1 + a(At – 1 - Ft – 1)
Example: F(March) = F(Feb) + α*[(A(Feb) – F(Feb)] = 100 + 0.2*(80 –
Exponential Smoothing Method (sales 100) or=actual
96. sales indicated by A in equation)
alpha = 0.2
Month Sales Forecast Comment and Calculation
Forecast for period 1 should be available before
1 100 100 starting the calculations. If it is not given then set
it equal to the sales of period 1.
2 80 100.00 =(100 + 0.2(100 -100))
3 90 96.00 =(100 + 0.2(80 -100))
4 110 94.80 =(96 + 0.2(90 -96))
5 100 97.84 =(94.8 + 0.2(110 -94.8))
6 110 98.27 =(97.84 + 0.2(100 -97.84))
7 95 100.62 =(98.27 + 0.2(110 -98.27))
8 115 99.50 =(100.62 + 0.2(95 -100.62))
9 120 102.60 =(99.5 + 0.2(115 -99.5))
10 90 106.08 =(102.6 + 0.2(120 -102.6)) 4
11 105 102.86 =(106.08 + 0.2(90 -106.08))
12 110 103.29 =(102.86 + 0.2(105 -102.86))
PRACTICE EXERCISE

• Determine forecasted sales Period Actual


according to the following: 1 300
• 2-period moving average from 3rd to
2 315
8th periods.
• 4-period moving average from 5th to 3 290
8th periods. 4 345
• 2-period weighted moving average 5 320
with t-1 weighted 0.6 and t-2 weighted
0.4 6 360
• Exponential smoothing with 7 375
alpha=0.2 and the period 6 forecast
8
being 375
5
MOVING AND WEIGHTED MOVING
AVERAGE
Actual 2-Period Expon. Smooth.
Deman Moving 4-Period Ft = Ft – 1 + a(At – 1 - Ft –
Period d Avg Moving Avg 2-Per.Wgted. 1)

1 300

2 315
300+315/2 (300x0.4)+(315x
3 290 = 0.6/1 =
4 345
300+315+290
5 320 +345/4=

6 360 375

375 + 0.2(360-375)
7 375 340.0 328.8 344.0 = 372.0
6

8 367.5 350.0 369.0 372.6


EXERCISE 4.1
Week Pints 3-Week Moving 3-Week Weighted Moving
Average Average

Aug 31 360

Sep 7 389

Sep 14 410

Sep 21 381

Sep 28 368

Oct 5 374

Oct 12
FT = FT – 1 + a(AT – 1 - FT – 1)
Week Pints Forecast
a=0.2

Aug 31 360 360 (Given)

Sep 7 389 360 + 0.2(360-360) = 360

Sep 14 410 360 + 0.2(389-360) = 365.8

Sep 21 381 365.8 + 0.2(410-365.8) =

Sep 28 368

Oct 5 374

Oct 12
EXERCISE 4.13
FT = FT – 1 + a(AT – 1 - FT – 1)
Years Transplan Forecast Forecast
ts a=0.6 a=0.9

1 45

2 50

3 52

4 56

5 58

6
EXERCISE 4.14
Week Actual Forecast Forecast |A-F1| |A-F2|
Demand 1 2

1 0.7 0.9 0.8 0.7-0.9= -0.2 0.7-0.8= 0.1

2 1 1.05 1.2 -0.05

3 1 0.95 0.9 0.05

4 1 1.2 1.11 -0.2

∑|A-F| = 0.5 ∑|A-F| =


∑(A-F) 2 = -0.4
∑
MAD = |actual - forecast| MSE = ∑ (forecast errors)2
n n
FORECAST 1 FORECAST 1
0.5/ 4 = 0.125

FORECAST 2 FORECAST 2
/4 = /4
Week Actual Forecast Forecast |A-F1|/A |A-F2|/A
Demand 1 2

1 0.7 0.9 0.8 0.2/0.7= 0.28 0.7-0.8/0.7=

2 1 1.05 1.2 0.05/1

3 1 0.95 0.9 0.05/1

4 1 1.2 1.11 0.2/1

∑|A-F|/A = 0.58 ∑|A-F|/A =


MAPE =
∑ 100|actuali - forecasti|/actuali
n
FORECAST 1
= 0.58/4 = 0.14

FORECAST 2
= /4 =

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