Question

The following data represented labor requirements for year 2018, for a large Printing operation in Kingston. As part of the management team, it is your responsibility as HR Manager, to put systems in place to meet labor demand for 2019. Use the following forecasting techniques to estimate the requirements for 2019.

Period	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
Labor	25	40	26	27	32	48	33	37	37	50	45	41

Required:

a) Using a 2-month simple moving average, smooth out your projections for 2012. (Note: No values are expected for the first two months)

b) Using the exponential smoothing model is given by: F_t+1 = (1 – a) F_t + a A_t calculate the exponentially smoothed values for each month, assuming that the demand for January has not changed. Smoothing coefficient (uncertainty): a = 0.15, for all calculations.

Answer 1

(a) 2-month simple moving average:
	Labor (2018)	Labor Forecast (2019)
Jan	25
Feb	40
Mar	26	32.5
Apr	27	33
May	32	26.5
Jun	48	29.5
Jul	33	40
Aug	37	40.5
Sep	37	35
Oct	50	37
Nov	45	43.5
Dec	41	47.5

To illustrate, forecast for March = (25 + 40)/2 = 32.5, similarly for others

(b) Exponential smoothing (α = 0.15):
	Labor (2018)	Labor Forecast (2019) [F(t + 1) = (1 - α) F(t) + α A(t)]
Jan	25	25
Feb	40	25
Mar	26	27.25
Apr	27	27.06
May	32	27.05
Jun	48	27.80
Jul	33	30.83
Aug	37	31.15
Sep	37	32.03
Oct	50	32.77
Nov	45	35.36
Dec	41	36.80

To illustrate, forecast for March = (1 - 0.15) * 25 + 0.15 * 40 = 27.25, similarly for others

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