FORECASTING

EXERCISES

1. The Instant Paper Office Supply Company sells and delivers office supplies within a 50 km radius of the warehouse. The
industry is very competitive so they want to forecast demand so as to be ahead of the competition.

MONTH SALES
January 37
February 40
March 41
April 37
May 45
June 50
July 43
August 47
September 56
October 52
November 55
December 54

Forecast January sales using each of the following: ( 5 points each)

a. A 6 month weighted moving average using the ff weights
July= 0.10
August= 0.1
September= 0.1
October= 0.2
November= 0.2
December- 0.3

b. Exponential smoothing using α= 0.30 and a October forecast of 60

c. trend line analysis

2. From the following table, it can be seen that demand for heart transplant has been increasing at the Philippine
Heart Center. ( 5 points each)
YEAR 1 2 3 4 5 6

Heart 45 50 52 56 58 ?
Transplants

The Director for Medical Services predicted 6 years ago that in year 1 the demand would be 41 surgeries.
a. Use exponential smoothing with a smoothing factor of 0.6 to develop a forecast for years 2-6.(5 points)
b. Use a 3-year simple moving average to forecast demand for years 4,5 and 6.(5 points)
c. Use trend projection to forecast to forecast years 6. (5 points).

3. Consulting income at Kate Walsh Associates for the period February to July has been as follows:

MONTH INCOME (P 1,000s)

February 70.0
March 68.5
April 64.8
May 71.7
June 71.3
July 72.8

a. Use exponential smoothing to forecasts August income. Assume that the initial forecast for February is P65,000. The
smoothing constant is α= 0..3
b. Adjust your forecast if Beta= 0.5
c. Determine the trend line and forecast for August
d. Calculate MAD and MAPD .