Assume that your stock of sales merchandise is maintained based on the forecast
ID: 1197535 • Letter: A
Question
Assume that your stock of sales merchandise is maintained based on the forecast demand. If the distributor's sales personnel call on the first day of each month, compute your forecast sales by each of the three methods requested here.
Using a simple three-month moving average, what is the forecast for September? (Round your answer to 2 decimal places.)
Using a weighted moving average, what is the forecast for September with weights of 0.10, 0.20, and 0.70 for June, July, and August, respectively? (Round your answer to 2 decimal places.)
Using single exponential smoothing and assuming that the forecast for June had been 145, forecast sales for September with a smoothing constant alpha of 0.40. (Round your answer to 2 decimal places.)
Assume that your stock of sales merchandise is maintained based on the forecast demand. If the distributor's sales personnel call on the first day of each month, compute your forecast sales by each of the three methods requested here.
Explanation / Answer
a. According to 3 month moving average the forecast for September is (145+185+215)/3 = 181.67. Since it is number of units and can not be in fractions, we take the lower whole number 181.
b.
c. For Smooting constant the forecast formula is as follows
Ft+1 = Dt + (1-) Ft
Where,
Ft+1 = Forecast of period t+1
Dt = Actual Demand of period t
Ft = Forecast of period t
Thus here
F of September = 0.4x145 + (1-0.4)145
= 58 + 87
= 145
Month Sales Weights Weighted quantity June 145 0.1 14.50 July 185 0.2 37.00 August 215 0.7 150.50 202.00