I. Suppose the monthly sales for a particular follows: Month 123 45 678 9 10 Sal
ID: 3049273 • Letter: I
Question
I. Suppose the monthly sales for a particular follows: Month 123 45 678 9 10 Sales 22 21 24 30 25 25 33 40 36 39 Month 11 12 13 14 15 16 17 18 19 20 Sales 50 55 44 48 55 47 61 58 55 60 Use a five-period moving average to compute forecasts of sales for months 6 to seven-period moving average to compute forecasts for months 8 to 20. Which fts better for months 8 to 20? Explain. (a) 20 and a (b) Use an exponential smoothing approach with smoothing constant = 0.2 to forecast sales for months 2 to 20·Change to 0.1. Does this make the fit better or worse? Ex Lin-Gond tho value of that minimizes the mean sauard plairnExplanation / Answer
a) It is found that 5 period moving average value is closed to actual value and so it is better than 7 period moving average.
b) When alpha is lowered to 0.1 it makes the fit worst. It can be seen from the difference with the actual values.
Month Sales 5-period moving average 7-period moving average Diff in actual and 5 period Diff in actual and 7 period Exponential Smoothening alpha 0.2 Exponential Smoothening alpha 0.1 1 22 22 22 2 21 21.8 21.9 3 24 22.2 22.1 4 30 23.8 22.9 5 25 24.0 23.1 6 25 24.4 0.6 24.2 23.3 7 33 25 8 26.0 24.3 8 40 27.4 25.7 12.6 14.3 28.8 25.8 9 36 30.6 28.3 5.4 7.7 30.2 26.9 10 39 31.8 30.4 7.2 8.6 32.0 28.1 11 50 34.6 32.6 15.4 17.4 35.6 30.3 12 55 39.6 35.4 15.4 19.6 39.5 32.7 13 44 44 39.7 0 4.3 40.4 33.9 14 48 44.8 42.4 3.2 5.6 41.9 35.3 15 55 47.2 44.6 7.8 10.4 44.5 37.3 16 47 50.4 46.7 -3.4 0.3 45.0 38.2 17 61 49.8 48.3 11.2 12.7 48.2 40.5 18 58 51 51.4 7 6.6 50.2 42.3 19 55 53.8 52.6 1.2 2.4 51.1 43.5 20 60 55.2 52.6 4.8 7.4 52.9 45.2