Question

In: Statistics and Probability

[13 marks] A company is interested in forecasting demand for a product. They have reason to...

[13 marks] A company is interested in forecasting demand for a product. They have reason to believe that the demand is not affected by any seasonal changes and that it does not increase or decrease systematically over time. They have data for the last 9 periods (below).

Period

1

2

3

4

5

6

7

8

9

Demand

230

210

220

250

300

280

240

230

200

In each part of this question, show your work: show the equation you use, how you plug in, and your final answer. Please do not round any answers.

a) [3 marks] Use a 4-period moving average to forecast demand for period 10.

b) [3 marks] Use a 3-period weighted moving average to forecast demand for period 10 using weights of 0.6, 0.3, and 0.1, respectively. Show your work.

c) [3 marks] Suppose the forecast for period 9 was 235 units. Use exponential smoothing with a smoothing constant of 0.6 to forecast demand for period 10.

d) [4 marks] Suppose the actual demand in period 10 was 211 units. Which of your forecasting methods from parts a through c performed best, and why? Please provide a table and make your conclusion based on your table.

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