Question

In: Economics

Milner Brewing Company experienced the following monthly sales (in thousands of barrels) during 2010: Jan. Feb....

Milner Brewing Company experienced the following monthly sales (in thousands of barrels) during 2010:

Jan.	Feb.	Mar.	Apr.	May	June
100	92	112	108	116	116

Please fill the blanks in the table below to answer these three questions: (round to the nearest integers)
(a)        Develop 2-month moving average forecasts for May through July.
(b)        Develop 4-month moving average forecasts for May through July.
(c)        Develop forecasts for February through July using the exponential smoothing method (with w = .5). Begin by assuming  .

				(c) Exponential
	Actual	(a) 2-month	(b) 4-month	Smoothing
Month	Sales	Moving Average	Moving Average	w = .5

Jan.	100	---	---	---
Feb.	92	---	---	100
Mar.	112		---	100 + .5(92 − 100) = 96
April	108		---	96 + .5(112 − 96) = 104
May	116
June	116
July	---

Expert Solution

Part A ) 2 Month Sales Average :

May Average = Average of sales of Mar and April = 112+108/2 = 110

June Average = Average of sales of April and May = 108 +116 /2 = 112

July Average = Average of sales of May and June = 116 +116 /2 = 116

Part B) 4 Month Sales Average :

May Average = Average of sales of Jan to April = 100+92+112+108 / 4 = 103

June Average = Average of sales of Feb to May = 92 + 112+108+116 /4= 107

July Average = Average of sales of Mar to June= 112 +108 +116+116 / 4 = 113

Part C ) Exponential Smoothing :

Formula :

Ft = Ft-1 + α (At-1 - Ft-1)

Where Ft = Current forecast

Ft-1 = Forecast of previous period

α = smoothing factor

At-1 = Actual demand of previous period

Feb = 100. It is considered to be the same as actual demand of previous time period.

Mar = 100 + .5(92 − 100) = 96

April = 96 + .5(112 − 96) = 104

May = 104 + .5( 108 -104 ) = 106

June = 106 + 5( 116 -106 ) = 111

Rahul Sunny answered 3 months ago

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