Altavox is a manufacturer and distributor of many electronic instruments and devices, including digital/analog multimeters, function generators, oscilloscopes,

frequency counters, and other test and measuring equipment. Altavox sells a line of test meters that are popular with professional electricians. The model VC202 is sold through six distributors to retail stores in the United States. These distributors are located in Atlanta, Boston, Chicago, Dallas, and Los Angeles, and have been selected to serve different regions in the country. The model VC202 has been a steady seller of the years due to its reliability and rugged construction. Altavox does not consider this a seasonal product, but there is some variability in demand. Demand for the product over the past 13 weeks is shown in the following table. Week Atlanta Boston Chicago Dallas LA Total 1 33 26 44 27 32 162 2 45 35 34 42 43 199 3 37 41 22 35 54 189 4 38 40 55 40 40 213 5 55 46 48 51 46 246 6 30 48 72 64 74 288 7 18 55 62 70 40 245 8 58 18 28 65 35 204 9 47 62 27 55 45 236 10 37 44 95 43 38 257 11 23 30 35 38 48 174 12 55 45 45 47 56 248 13 40 50 47 42 50 229 Average 40 42 47 48 46 222

The demand in the regions varies between a high of 40 units on average per week in Atlanta and 48 units in Dallas. This quarters data is pretty close to the demand last year. Management would like you to experiment with some forecasting models to determine what should be used in a new system being implemented. The new system is programmed to use one of two models: simple moving average or exponential smoothing. 1. Consider using a simple moving average model. Experiment with models using five weeks and three weeks data. The past data in each region is given below. Evaluate the forecasts that would have been made over the past 13 weeks using the mean absolute deviation and tracking signal as criteria. -5 45 62 62 42 43 254 -4 38 18 22 35 40 153 -3 30 48 72 40 54 244 -2 58 40 44 64 46 252 -1 37 35 48 43 35 198

Week Atlanta Boston Chicago Dallas LA Total 2.

Next consider using a simple exponential smoothing model. In your analysis, test two alpha values: .2 and .4. Use the same criteria for evaluating the model as in part 1. Assume that the initial previous forecast for the model using an alpha value of .2 is the past three-week average. For the model using an alpha of .4, assume that the previous forecast is the past five-week average.

3. Present a report to the senior managers of Altavox in which you make a recommendation for the appropriate model to use for forecasting. Be sure to support your recommendation with your analyses.