Jason Wilkins - Week 1 Homework

4.2
Year 1 2 3 4 5 6 7 8 9 10 11
Demand 7 9 5 9 13 8 12 13 9 11 7

a) Plot the above data on a graph. Do you observe any trend, cycles, or random variations? No

b) Starting in year 4 and going to year 12, forecast demand using a 3-year moving average. Plot your
forecast on the same graph as the original data. 7, 7.67, 9, 10, 11, 11, 11.33, 11, 9

c) Starting in year 4 and going to year 12, forecast demand using a 3-year moving average with weights
of .1, .3, and .6, using .6 for the most recent year. Plot this forecast on the same graph. 6.4, 7.8, 11, 9.6,
10.9, 12.2, 10.5, 10.6, 8.4

4.6 The monthly sales for Yazici Batteries, Inc., were as follows:
Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sales 20 21 15 14 13 16 17 18 20 20 21 23

a) Plot the monthly sales data.

Forecasting

25
20
15 Demand
Value

10 Forecast

5
0
1 3 5 7 9 11

Time

b) Forecast January sales using each of the following:

i) Naive method. 23
ii) A 3-month moving average. 21.33
iii) A 6-month weighted average using .1, .1, .1, .2, .2, and .3, with the heaviest
weights applied to the most recent months. 20.6
iv) Exponential smoothing using an α = .3 and a September forecast of 18. 20.81
v) A trend projection 20.67
c) With the data given, which method would allow you to forecast next March’s sales? Trend
Projection
4.9 Lenovo uses the ZX-81 chip in some of its laptop computers. The prices for the chip during the past
12 months were as follows:

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Price 1.8 1.67 1.7 1.85 1.9 1.87 1.8 1.83 1.7 1.65 1.7 1.75

a) Use a 2-month moving average on all the data and plot the averages and the prices. 1.74, 1.69,
1.78, 1.88, 1.89, 1.84, 1.82, 1.77, 1.68, 1.68, 1.73

Forecasting

1.95
1.9
1.85
1.8
Demand
Value

1.75
1.7 Forecast
1.65
1.6
1.55
1.5
1 3 5 7 9 11

Time

b) Use a 3-month moving average and add the 3-month plot to the graph created in part (a). 1.72,
1.74, 1.82, 1.87, 1.86, 1.83, 1.78, 1.73, 1.68

Forecasting

1.95
1.9
1.85
1.8
Demand
Value

1.75
1.7 Forecast
1.65
1.6
1.55
1.5
1 3 5 7 9 11

Time

c) Which is better (using the mean absolute deviation): the 2-month average or the 3-month
average? 3 Month Average
 d) Compute the forecasts for each month using exponential smoothing, with an initial forecast for
January of $1.80. Use α = .1, then α = .3, and finally α = .5. Using MAD, which α is the best?
1.80, 1.79, 1.78, 1.79, 1.80, 1.80, 1.80, 1.81, 1.79, 1.78, 1.77, 1.77
1.80, 1.76, 1.74, 1.77, 1.81, 1.83, 1.82, 1.82, 1.79, 1.75, 1.73, 1.74 Best

1.80, 1.74, 1.72, 1.78, 1.84, 1.86, 1.83, 1.83, 1.76, 1.71, 1.70, 1.73