Forecasting Example Problem-Forecasting Structure Fires Last Period Forecast: t+
ID: 388078 • Letter: F
Question
Forecasting Example Problem-Forecasting Structure Fires Last Period Forecast: t+1 whereF forecast for the next perio d, t 1 and D-demand for the current period, t Year Demand 12 16 10 9 13 t+1 1 2 3 4 5 Weighted Moving Average Moving Average Forecast Forecast 1+1- a. Naïve forecast for year 6? b. 4-year moving average forecast for year 6? where F forecast for the next period, t-1 and D -actual demand for the period, t 1-i and n number of most recent demand observations used in the forecast and W weight assigned to the demand in period, t 1-i t+1- C. What is the Weighted Moving Average forecast for year 6? (0.5, 0.3, 0.2)Explanation / Answer
Solution:
(a) Naive forecast:
In Naive forecast, the forecast of a given period is simply the actual demand of the previous period.
Forecast for year 6 = Actual demand for year 5
Forecast for year 6 = 13
(b) 4-year moving average:
4-year moving average forecast for year 6 = Actual demand for (Year 5 + year 4 + year 3 + year 2) / 4
Forecast for year 6 = (13 + 9 + 10 + 16) / 4
Forecast for year 6 = 12
(c) Weighted moving average forecast:
Weighted moving average forecast for year 6 = (W1 x D5) + (W2 x D4) + (W3 x D3)
Where, W = Weights, D = Demand for respective year
Forecast for year 6 = (0.5 x 13) + (0.3 x 9) + (0.2 x 10)
Forecast for year 6 = 11.2