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Demand Forecasting Practice Problem

The document discusses various forecasting methods: simple moving average, weighted moving average, and single exponential smoothing. It provides historical demand data and asks to calculate forecasts using each method for periods 4-12. It also asks to calculate the mean absolute deviation (MAD) and mean absolute percentage error (MAPE) for each method and identify the preferred method based on these accuracy metrics.

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manoseth
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507 views2 pages

Demand Forecasting Practice Problem

The document discusses various forecasting methods: simple moving average, weighted moving average, and single exponential smoothing. It provides historical demand data and asks to calculate forecasts using each method for periods 4-12. It also asks to calculate the mean absolute deviation (MAD) and mean absolute percentage error (MAPE) for each method and identify the preferred method based on these accuracy metrics.

Uploaded by

manoseth
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Simple moving average

Weighted moving average

Single exponential smoothing

Mean absolute deviation

Mean absolute percent error

Your manager is trying to determine what forecasting method to use. Based upon the
following historical data, calculate the following forecast and specify what procedure you
would utilize.
Month
Demand
(t)
1 62
2 65
3 67
4 68
5 71
6 73
7 76
8 78
9 78
10 80
11 84
12 85

a. Calculate the simple three-month moving average forecast for periods 412.
b. Calculate the weighted three-month moving average using weights of 0.40, 0.30,
and 0.30 for periods 412.
c. Calculate the exponential smoothing forecast for periods 212 using an initial
forecast (F1) of 61 and an of 0.20.
d. Calculate the mean absolute deviation (MAD) for the forecasts made by each
technique in periods 412. Which forecasting method do you prefer? Please give
reasons in support of your answer.
e. Calculate the MAPE for the Forecasts? Which forecasting method should you
choose based on MAPE?
Month Absolute 3-mo Absolute Absolute
Demand 3-mo. MA Ft
(t) deviation WMA deviation deviation
1 62 61 1
2 65 61.2 3.8
3 67 61.96 5.04
4 68 64.6666667 3.33333333 64.9 3.1 62.968 5.032
5 71 66.6666667 4.33333333 66.8 4.2 63.9744 7.0256
6 73 68.6666667 4.33333333 68.9 4.1 65.37952 7.62048
7 76 70.6666667 5.33333333 70.9 5.1 66.90362 9.096384
8 78 73.3333333 4.66666667 73.6 4.4 68.72289 9.2771072
9 78 75.6666667 2.33333333 75.9 2.1 70.57831 7.42168576
10 80 77.3333333 2.66666667 77.4 2.6 72.06265 7.93734861
11 84 78.6666667 5.33333333 78.8 5.2 73.65012 10.3498789
12 85 80.6666667 4.33333333 81 4 75.7201 9.27990311
Average
73.9166667
Demand
MAD 4.07407407 3.86666667 6.90669896
MAPE 5.51% 5.23% 9.34%

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