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A company has the following demand for the previous nine weeks
A company has the following demand for the previous nine weeks. Use the information to develop:
a. a four-period simple moving average and a forecast for period 10.
b. develop a four-period weighted moving average using the weights 0.4, 0.3, 0.2, and 0.1.
c. develop a single exponential forecast for period 10 using a smoothing constant, a, equal to 0.25. Use 403 as the initial forecast.
| Period | Actual Demand: A_t |
| 1 | 403 |
| 2 | 422 |
| 3 | 325 |
| 4 | 428 |
| 5 | 332 |
| 6 | 317 |
| 7 | 376 |
| 8 | 478 |
| 9 | 382 |
Expert Solution
a.
Forecast for the period 10 using n = 4 is calculated as follow:
F10 = 317 + 376 + 478 + 3824F10 = 1,5534F10 = 388F10 = 317 + 376 + 478 + 3824F10 = 1,5534F10 = 388
b.
Weighted moving average for period 10 is calculated as follow:
Weighted moving average = (0.4 × 382) + (0.3 × 478) + (0.2 × 376) + (0.1 × 317)1Weighted moving average = 152.8 + 143.4 + 75.2 + 31.71Weighted moving average = 403.1Weighted moving average = (0.4 × 382) + (0.3 × 478) + (0.2 × 376) + (0.1 × 317)1Weighted moving average = 152.8 + 143.4 + 75.2 + 31.71Weighted moving average = 403.1
c.
Forecast for next period using an exponential smoothing is calculated as follow:
Forecast for next period = 395 + (0.25 * (382 - 395))
Forecast for next period = 395 + (0.25 * (-13))
Forecast for next period = 395 - 3.25
Forecast for next period = $391.75
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