Forecasting

1. Develop a 4-month moving average forecast for Wallace Garden Supply, and compute the MAD. A 3-month moving average forecast was developed in the section on moving averages in Table 5.2

2. Using MAD, determine whether the forecast in Problem 1 or the forecast in the section concerning Wallace Garden Supply is more accurate.

3. Data collected on the yearly demand for 50-pound bags of fertilizer at Wallace Garden Supply are shown in the following table. Develop a 3-year moving average to forecast sales. Then estimate demand again with a weighted moving average in which sales in the most recent year are given a weight of 2 and sales in the other 2 years are each given a weight of 1. Which method do you think is better?

4. Develop a trend line for the demand for fertilizer in Problem 3, using any computer software.

5. In Problems 3 and 4, three different forecasts were developed for the demand for fertilizer. These three forecasts are a 3-year moving average, a weighted moving average, and a trend line. Which one would you use? Explain your answer.

6. Use exponential smoothing with a smoothing constant of 0.3 to forecast the demand for fertilizer given in Problem 3. Assume that last period's forecast for year 1 is 5,000 bags to begin the procedure. Would you prefer to use the exponential smoothing model, or the weighted average model developed in Problem 3? Explain your answer.

7. A college student has just completed her junior year. The following table summarizes her grade-point average (GPA) for each of the past nine quarters:

8. Sales of Cool-Man air conditioners have grown steadily during the past 5 years:

The sales manager had predicted, before the business started, that year 1's sales would be 410 air conditioners. Using exponential smoothing with a weight of α=0.30, α=0.30, develop forecasts for years 2 through 6.

9. Using smoothing constants of 0.6 and 0.9, develop forecasts for the sales of Cool-Man air conditioners (see Problem 8).

10. What effect did the smoothing constant have on the forecast for Cool-Man air conditioners? (See Problems 8 and 9.) Which smoothing constant gives the more accurate forecast? Explain:

11. Use a 3-year moving average forecasting model to forecast the sales of Cool-Man air conditioners (see Problem 8).

12. Using the trend projection method, develop a forecasting model for the sales of Cool-Man air conditioners (see Problem 8).

13. Would you use exponential smoothing with a smoothing constant of 0.3, a 3-year moving average, or a trend line to predict the sales of Cool-Man air conditioners? Refer to Problems 8, 11, and 12.

14. Sales of industrial vacuum cleaners at R. Lowenthal Supply Co. over the past 13 months are as follows:

15. Using the data below, develop a multiple regression model to predict sales (with both trend and seasonal components), using dummy variables to incorporate the seasonal factor into the model. Use this model to predict sales for each quarter of the next year. Comment on the accuracy of this model.