Question

Forecasting

Illustrate your work to show how the answers were obtained. Round to two decimal places. Feel free to illustrate your answers in tables if this helps you to visualize the mathematical functions taking place.

Based on the limited data presented, calculate the potential sales for August to provide the best possible estimate.

Month --- Past Sales (Units)
June --- 38,500
July --- 33,000
August ---  

The following table contains the number of safety violation during the first 6 months of operation at ABC Industries. If a three-month moving average is used, what would have been the forecast for July?

Month --- Complaints
Jan --- 45
Feb --- 39
Mar --- 40
Apr --- 46
May --- 39
Jun --- 40 Jul ---

Answer 1

1.

Sales data given is as bellow

Month --- Past Sales (Units)
June --- 38,500
July --- 33,000
August ---  

Now, since only two months of sales data is available, the best forecast method is the moving average which takes into account recent month sales for forecasting.

We will use two-month moving average to calculate forecast for August for providing best possible estimate.

Two-month Moving Average Forecast for August = (Sales value for June + Sales value for July)/ 2

= (38500+33000)/2

= 35,750

Forecast for August is 35,750.

2.

Data given for complaints is

Month --- Complaints
Jan --- 45
Feb --- 39
Mar --- 40
Apr --- 46
May --- 39
Jun --- 40

Jul ---

Using three month moving average, the forecast for Jul will be

Forecast (Jul) = (Sum of Complaints for past 3 months)/ 3 = (Total complaints in Jun + Total complaints in May + Total complaints in Apr)/ 3

= (46+39+40)/ 3

= 41. 67 ~ 42 (rounded)

Forecast for Jul is 41. 67 ~ 42 (rounded)

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