1. Data collected on the yearly demand for 50-pound bags of fertilizer at Wallace Garden Supply...

1. Data collected on the yearly demand for 50-pound bags of fertilizer at Wallace Garden Supply are shown in the following table. Develop a three-year moving average to forecast sales. Then estimate demand again with a weighted moving average in which sales in the most recent year are giveo9n a weight of 2 and sales in the other two years are each given a weight of 1. Which method do you think is best? Year Demand for Fertilizer (1,000s of bags) 1 4 2 6 3 4 4 5 5 10 6 8 7 7 8 9 9 12 10 14 11 15

Expert Solution

3-year weighted moving average method is best among the two methods because it results in lower RMSE (Root Mean Square Error).

Year	Demand	3-year moving average	Error Squared	3-year weighted moving average	Error Squared
1	4
2	6
3	4	4.67	0.44	4.5	0.25
4	5	5.00	0.00	5	0
5	10	6.33	13.44	7.25	7.5625
6	8	7.67	0.11	7.75	0.0625
7	7	8.33	1.78	8	1
8	9	8.00	1.00	8.25	0.5625
9	12	9.33	7.11	10	4
10	14	11.67	5.44	12.25	3.0625
11	15	13.67	1.78	14	1
RMSE =			5.58		4.18

Please do rate me and mention doubts, if any, in the comments section.

jeff jeffy answered 2 years ago

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