Please eplain answer. Especially on B. Thanks Data collected on the yearly deman
ID: 448275 • Letter: P
Question
Please eplain answer. Especially on B. Thanks
Data collected on the yearly demand for 50-pound bags of fertilizer at Wallace Garden Supply are shown in the following table.
Year Demand for fertilizer
(1,000s of bags)
1 4
2 6
3 4
4 5
5 10
6 9
7 10
8 11
9 15
10 16
11 18
b. Then estimate demand again with a weighted moving average in which sales in the most recent year are given a weight of 3 and a weight of 2 for the second past year and sales in the other 2 years are each given a weight of 1.
c. Which method do you think is best?
d. Develop a trend line for the demand for fertilizer using any computer software.
e. You have now developed three different forecasts. These are a3-year moving average, a weighted moving average, and a trend line. Which one would you use? Explain your answer.
Explanation / Answer
(b)
forecast for 5th period = (3*5) + (2*4) + (1*6) + (1*4) = 33
forecast for 6th period = (3*10) + (2*5) + (1*4) + (1*6) = 50
(c)
3 period moving average is best because they have least forecast error
Year Demand forecast error = Demand - forecast 1 4 2 6 3 4 4 5 5 10 33 -23 6 9 50 -41 7 10 56 -46 8 11 63 -52 9 15 72 -57 10 16 86 -70 11 18 99 -81