Answer the following question with respect to the excel file TEST10-DATA posted

ID: 374996 • Letter: A

Question

Answer the following question with respect to the excel file TEST10-DATA posted on Sakai. Which of the following statements is true?

A. The 3-period moving average for period 3 can be found easily.

B. The 3-period moving average for period 4 is 50.

C. The 9-period moving average for period 11 is 190.11

D. The linear trend projection based forecast for period 20 is 132.15.

With fewer periods in a moving average, it will take longer to adjust to a new level of data values.

Month Demand D(t) 1 77 2 67 3 89 4 85 5 90 6 92 7 95 8 92 9 99 10 102 11 105

Answer to first question :

Following points may be noted:

a)Using 3 period moving average, first forecast can be made from period 4 only

b)3 period moving average for period 4 = ( 67 + 89 + 85)/ 3 = 241/3 = 80.33

c))9 period moving average for period 11

= Sum of values from period 2 to 10 / 9

= ( 67 + 89 + 85 + 90 + 92 + 95 + 92 + 99 + 102 ) / 9 = 811/9 = 90.11

d)For establishing linear trend equation, we place values of month and demand in two separate columns and apply the formula LINEST ( )

Let The linear equation be :

Y = a + b.t t = Derial number of month , Y = Forecasted demand

Accordingly by using the formula LINEST ( ), we obtain following values :

A = 72.327 b = 2.99

Hence, Y = 72.327 + 2.99.t

Hence forecast for period 20 will be = 72.327 + 2.99 x 20 = 72.327 +59.8 = 132.127 ( nearest to 132.15)

Thus correct answer is “D. The linear trend projection based forecast for period 20 is 132.15”