Problem 5 - Use the data below to calculate two forecasts: 1) A 4 period Moving
ID: 3275228 • Letter: P
Question
Problem 5 - Use the data below to calculate two forecasts: 1) A 4 period Moving Average; 2) An Exponetial Smoothed forecast with an alpha of .75 What is the expected error for these two forecasting techniques? Which one do you recommend using? Actual Month Demand January 650 February 665 March 750 April 825 May 1110 June 660 July 690 August 760 September 810 October 1060 November 1000 December 900 January 850 February 780 March 770 April 760 May 810 June 740 July 750 August 1125 September 1250 October 1850 November 1930 December 2100 Problem 5 - Use the data below to calculate two forecasts: 1) A 4 period Moving Average; 2) An Exponetial Smoothed forecast with an alpha of .75 What is the expected error for these two forecasting techniques? Which one do you recommend using? Actual Month Demand January 650 February 665 March 750 April 825 May 1110 June 660 July 690 August 760 September 810 October 1060 November 1000 December 900 January 850 February 780 March 770 April 760 May 810 June 740 July 750 August 1125 September 1250 October 1850 November 1930 December 2100Explanation / Answer
for above 4 month moving average forecast:
exponential smoothing forecast:
as MSE for exponential smoothing is less we should prefer it over 4 month moving average.
Month Demand(A) forecast (F) (A-F)^2 January 650 February 665 March 750 April 825 May 1110 722.50 150156.25 June 660 837.50 31506.25 July 690 836.25 21389.06 August 760 821.25 3751.56 September 810 805.00 25.00 October 1060 730.00 108900.00 November 1000 830.00 28900.00 December 900 907.50 56.25 January 850 942.50 8556.25 February 780 952.50 29756.25 March 770 882.50 12656.25 April 760 825.00 4225.00 May 810 790.00 400.00 June 740 780.00 1600.00 July 750 770.00 400.00 August 1125 765.00 129600.00 September 1250 856.25 155039.06 October 1850 966.25 781014.06 November 1930 1243.75 470939.06 December 2100 1538.75 315001.56 total 2253871.88 MSE=total/n 112693.59