Forecasting For this problem you need to show all the steps of your calculations
ID: 450842 • Letter: F
Question
Forecasting
For this problem you need to show all the steps of your calculations to receive credit.
Question 1. 1.
a) Calculate the forecast for month 5 using exponential forecasting using = 0.25.
b) Calculate the 2 month moving average for all available months.
c) Calculate the error for exponential smoothing and the 2 month MA using MSE and MAPE. Which forecasting technique provides the best forecast (be specific)?
Am I solving this question in the right way ? Cause these are based on my book solutions please someone let me know cause the previous answer to this was wrong.
Month
Actual Demand
Exponential Forecast
1
22
20
2
24
3
25
4
20
5
Solution: Below is my work Copy and Pasted From the Excel Sheet:
1
A
B
Error
Error^2
I Error I
Absolute Percentage Error
Month
Sales
Exponential Forecast
Absolute Error(C=A-B)
Square Error (D=C^2)
E=ICI
F=E/A*100%
1
22
20.00
2.00
4.00
2.00
9.09
2
24
20.50
3.50
12.25
3.50
14.58
3
25
21.38
3.63
13.14
3.63
14.52
4
20
22.28
-2.28
5.20
2.28
11.40
5
21.71
Total
91
105.87
6.84
34.59
11.41
49.59
Exponential Formula=>Ft+1=Ft+ alpha*(Dt-Ft)
For Exponential Smoothing=
Mean Square Error(MSE)=(Error^2)/n
MSE=34.59/4=
8.65
Mean Absolute Percentage Error=(IEtI/Dt)(100%)/n
MAPE= 49.59/4=
12.40
A
2 Month Moving Average (MA)
Error
Error^2
I Error I
Absolute Percentage Error
Month
Sales
Absolute Error(C=A-B)
Square Error (D=C^2)
E=ICI
F=E/A*100%
3
25
23.00
2.00
4.00
2.00
8
4
20
24.50
-4.50
20.25
4.50
22.5
Total
-2.50
24.25
6.50
30.5
Moving Average=(Sales Month 1+Sales Month 2)/2
For 2 Month Moving Average (MA)=
Mean Square Error (MSE)= (Error^2)/n
MSE=24.25/2=
12.13
Mean Absolute Percentage Error=(IEtI/Dt)(100%)/n
MAPE=30.5/2=
15.25
Conclusion: The technique of “Exponential Smoothing” is better to use because it has lower MSE and MAPE.
Question 1. 1.
a) Calculate the forecast for month 5 using exponential forecasting using = 0.25.
b) Calculate the 2 month moving average for all available months.
c) Calculate the error for exponential smoothing and the 2 month MA using MSE and MAPE. Which forecasting technique provides the best forecast (be specific)?
Am I solving this question in the right way ? Cause these are based on my book solutions please someone let me know cause the previous answer to this was wrong.
Month
Actual Demand
Exponential Forecast
1
22
20
2
24
3
25
4
20
5
Explanation / Answer
MSE = 34.59 / 4 = 8.6475
MAPE = 14.2578
MSE = 24.25 / 2 = 12.125
MAPE = 16.25
BASED ON MSE AND MAPE , WE CAN SAY THAT EXPONENTIAL SMOOTHING IS BEST FORECASTING TECHNIQUE.
Actual Demand Exponential Forecast Error (Error)^2 22 20 2.00 4.00 24 20.50 3.50 12.25 25 21.38 3.63 13.14 20 22.28 -2.28 5.20 21.71 Sum 34.59