Assignment # 1 A ski repair shop at a resort in Colorado sells replacement poles
ID: 423769 • Letter: A
Question
Assignment # 1 A ski repair shop at a resort in Colorado sells replacement poles cach season. The shop nceds to develop a forecast of next season's sales so that they can place an order for poles with their supplier well in advance of the beginning of the season. Sales data for the past five years are shown below. Compare the forecasts given by the following models Year Sales (units):350 375355 375 390 Develop forecasts using: a. A 5 year moving average. b. A weighted moving average model with weights of 0.2,0.2,0.1,0.3, and 0.2 for years 1 through 5 respectively. c. An exponential smoothing model with year 1 forecast of 380 and 0.3Explanation / Answer
Answer to question a :
Forecast basis 5 year moving average
= Sum of actual sales for year 1 through 5 / 5
= ( 350 + 375 + 355 + 375 + 390 ) / 5
= 1845/5
= 369
Answer to question b :
Forecast for year 5 basis weighted moving average
= 0.2 x Sales of Year 1 + 0.2 x Sales of year 2 + 0.1 x Sales of year 3 + 0.3 x Sales of year 4 + 0.2 x Sales of year 5
= 0.2 x 350 + 0.2 x 375 + 0.1 x 355 + 0.3 x 375 + 0.2 x 390
= 70 + 75 + 35.5 + 112.5 + 78
= 371
Answer to question c :
Following is the formula for exponential smoothing forecast :
Ft = alpha x At-1 + ( 1 – alpha) xFt-1 = 0.3x At-1 + 0.7 x Ft-1
Where ,
Ft, Ft-1 = forecasts for period t and t-1 respectively
At-1 = Actual sales for period t-1
It is also given that forecast foryear 1 = 380
On basis of above data and formula forecasts of sales for year 2 through 5are as follows :
Year
Actual sales
Forecast value
1
350
380
2
375
371
3
355
372.20
4
375
367.04
5
390
369.43
Year
Actual sales
Forecast value
1
350
380
2
375
371
3
355
372.20
4
375
367.04
5
390
369.43