Question

In: Operations Management

Forecasting Illustrate your work to show how the answers were obtained. Round to two decimal places....

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 following data, develop a forecast for the expected demand for Year 2. Assume the demand for year two will be 130,000 units. This is a seasonal demand forecast. You may illustrate this in tables if you wish, but show your calculation within the table. Round to two decimal places in your calculations

Year 1 --- Past Sales (Units)

Quarter 1 --- 28,000
Quarter 2 --- 36,400
Quarter 3 --- 28,600
Quarter 4 --- 27,850

Given the following data, use a three-quarter moving average to forecast the demand for the third quarter of this year.

------------ Jan --- Feb --- Mar --- Apr --- May --- Jun --- Jul --- Aug --- Sep --- Oct --- Nov --- Dec
Last Year 260 --- 280 --- 275 --- 320 --- 315 --- 345 --- 275 --- 290 --- 280 --- 345 --- 368 --- 388
This year 270 --- 275 --- 265 --- 370 --- 325 --- 345                      

Solutions

Expert Solution

1)

Answer:

Seasons of Year 2 Forecast sales for Year 2
Quarter 1 30119.98
Quarter 2 39155.98
Quarter 3 30765.41
Quarter 4 29958.63

As, given that Demand for Year 2 is 130000

Hence, Demand for each quarter of Year 2 would be 130000/4

Demand for each quarter of Year 2 =32500

Important formula:

Seasonal Factor=Seasonal Average/Overall Average

Forecast sales for Year 2=Seasonal Factor*Demand for each quarter

1 B C D E F
2 Forecast is Prepared with Seasonality
3 Season Part Sales of Year 1 Seasonal Average Seasonal Factor Forecast sales for Year 2
4 Quarter 1 28000 28000 0.93 30119.98
5 Quarter 2 36400 36400 1.20 39155.98
6 Quarter 3 28600 28600 0.95 30765.41
7 Quarter 4 27850 27850 0.92 29958.63
8 Overall Average 30212.5

Formula:

Forecast is Prepared with Seasonality
Season Part Sales of Year 1 Seasonal Average Seasonal Factor=Seasonal Average/Overall Average Forecast sales for Year 2=Seasonal Factor*Demand for each quarter
Quarter 1 28000 =AVERAGE of 28000 =28000/30212.5 =32500*0.93
Quarter 2 36400 =AVERAGE of 36400 =36400/30212.5 =32500*1.2
Quarter 3 28600 =AVERAGE of 28600 =28600/30212.5 =32500*0.95
Quarter 4 27850 =AVERAGE of 27850 =27850/30212.5 =32500*0.92
Overall Average =AVERAGE of 28000,36400,28600 and 27850

2)

Answer:

3 Quarter Moving average forecast for This Year Quarter 3: 983.67

Quarter 1: Jan, Feb and March, Quarter 2: April, May and Jun Quarter 3: Jul, Aug and Sep Quarter 4: Oct, Nov and Dec

3 Quarter Moving average forecast of Quarter 4 = average of actual values of Quarter 1 to Quarter 3

Forecast using 3 Quarter Moving average
Month Last Year This Year Season Last Year This Year Year Season Actual 3 Quarter Moving average forecast
Jan 260 270 Quarter 1 815 810 Year 1 Quarter 1 815
Feb 280 275 Quarter 2 980 1040 Year 1 Quarter 2 980
Mar 275 265 Quarter 3 845 Year 1 Quarter 3 845
Apr 320 370 Quarter 4 1101 Year 1 Quarter 4 1101 880.00
May 315 325 Year 2 Quarter 1 810 975.33
Jun 345 345 Year 2 Quarter 2 1040 918.67
July 275 Year 2 Quarter 3 983.67
Aug 290
Sep 280
Oct 345
Nov 368
Dec 388

Formula:

Forecast using 3 Quarter Moving average
Month Last Year This Year Season Last Year This Year Year Season Actual 3 Quarter Moving average forecast
Jan 260 270 Quarter 1 =SUM of 260, 280 and 275 =SUM of 270, 275 and 265 Year 1 Quarter 1 815
Feb 280 275 Quarter 2 =SUM of 320, 315 and 345 =SUM of 370, 325 and 345 Year 1 Quarter 2 980
Mar 275 265 Quarter 3 =SUM of 275, 290 and 280 Year 1 Quarter 3 845
Apr 320 370 Quarter 4 =SUM of 345,368 and 388 Year 1 Quarter 4 1101 =AVERAGE of 815,980 and 845
May 315 325 Year 2 Quarter 1 810 =AVERAGE of 980,845 and 1101
Jun 345 345 Year 2 Quarter 2 1040 =AVERAGE of 845, 1101 and 810
July 275 Year 2 Quarter 3 =AVERAGE of 1101,810 and 1040
Aug 290
Sep 280
Oct 345
Nov 368
Dec 388

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