Your manager is trying to determine what forecasting method to use. Based upon the following historical data, calculate the following forecast and specify what method you prefer and why.
|
MONTH
|
ACTUAL DEMAND
|
|
1
|
450
|
|
2
|
500
|
|
3
|
550
|
|
4
|
600
|
|
5
|
650
|
|
6
|
700
|
|
7
|
500
|
|
8
|
550
|
|
9
|
400
|
|
10
|
500
|
|
11
|
675
|
|
12
|
600
|
a. Calculate the simple three-month moving average and Mean Absolute Deviation for periods 4-12.
b. Calculate the weighted three-month moving average and Mean Absolute Deviation using weights of 0.50, 0.30, and 0.20 for periods 4-12.
c. Calculate the single exponential smoothing forecast and Mean Absolute Deviation for periods 2-12 using an initial forecast (F1) of 61 and an alpha of 0.30.
d. Which of the above forecasting methods do you prefer? Please explain why?