Table 7.

Table 7.1 Quarterly Demand for Tahoe Salt

Year, Qtr
00,2
00,3
00,4
01,1
01,2
01,3
01,4
02,1
02,2
02,3
02,4
03,1

Period
t

Demand
Dt

1
2
3
4
5
6
7
8
9
10
11
12

8,000
13,000
23,000
34,000
10,000
18,000
23,000
38,000
12,000
13,000
32,000
41,000

Demand

Figure 7.1 Quarterly Demand at Tahoe Salt

45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
00,2

00,3

00,4

01,1

01,2

01,3

01,4

Year, Quarter

02,1

02,2

02,3

02,4

03,1

Figure7.2

Figure 7.2 Deseasonalized Demand for Tahoe Salt

Period
t
1
2
3
4
5
6
7
8
9
10
11
12

Demand
Dt
8,000
13,000
23,000
34,000
10,000
18,000
23,000
38,000
12,000
13,000
32,000
41,000

Deseasonalized
Demand

19,750
20,625
21,250
21,750
22,500
22,125
22,625
24,125

Equation 7.2 Deseasonalizing Demand

where:
D = Demand
p = periodicity
t = period

Figure 7.3 Deseasonalized Demand for Tahoe Salt

45,000
40,000
35,000

Demand

30,000
25,000
20,000
15,000
10,000
5,000
0
0

10

Period, t

Demand

Deseasonalized Demand

12

14

Sheet1

REGRESSION SUMMARY OUTPUT

Regression Statistics
Multiple R
0.958065237
R Square
0.917888998
Adjusted R Square
0.90420383
Standard Error 414.5033124
Observations
8
ANOVA
df
Regression
Residual
Total

Intercept
X Variable 1

1
6
7

SS
MS
F
Significance F
11523809.52 11523810 67.07182 0.000178609
1030877.976
171813
12554687.5

Coefficients Standard Error

t Stat
P-value
18,439
440.8087079 41.82991 1.25E-08
524
63.95924968 8.189738 0.000179

Initial Level, L
Trend, T

Lower 95% Upper 95% Lower 95.0% Upper 95.0%

17360.36726 19517.609 17360.3673 19517.6089
367.3067633 680.31228 367.306763 680.312284

Figure7.4

Deseasonaliz
ed
Seasonal Factor Estimate
Demand Demand
D
t
(Eqn
7.4)
(Eqn 7.5) S t
(Eqn 7.6) S i
Dt

Historical Data
Period
t
1
2
3
4
5
6
7
8
9
10
11
12

8,000
13,000
23,000
34,000
10,000
18,000
23,000
38,000
12,000
13,000
32,000
41,000

18,963
19,487
20,011
20,535
21,059
21,583
22,107
22,631
23,155
23,679
24,203
24,727

Forecasted Data

Year, Qtr
03,2
03,3
03,4
04,1

Period
t
13
14
15
16

Forecasted
Demand

0.42
0.67
1.15
1.66
0.47
0.83
1.04
1.68
0.52
0.55
1.32
1.66
45,000
40,000

Ft 1

35,000

11,868
17,527
30,770
44,794

30,000
25,000
20,000

0.47
0.68
1.17
1.67

Forecast
8,913
13,251
23,413
34,293
9,898
14,676
25,865
37,794
10,883
16,102
28,318
41,294

Figure7.5

Tahoe Salt Forecasts Using Four-Period Moving Average

Period Demand
t
Dt
1
8,000
2
13,000
3
23,000
4
34,000
5
10,000
6
18,000
7
23,000
8
38,000
9
12,000
10
13,000
11
32,000
12
41,000
13
14
15
16

Level
Lt

19,500
20,000
21,250
21,250
22,250
22,750
21,500
23,750
24,500

Forecast
Ft

Error
Et

Absolute
Error
At

Mean Squared
Error
MSEt

19,500
20,000
21,250
21,250
22,250
22,750
21,500
23,750
24,500
24,500
24,500
24,500

9,500
2,000
-1,750
-16,750
10,250
9,750
-10,500
-17,250

9,500
2,000
1,750
16,750
10,250
9,750
10,500
17,250

90,250,000
47,125,000
32,437,500
94,468,750
96,587,500
96,333,333
98,321,429
123,226,563

45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0

MADt % Error MAPEt

9,500
5,750
4,417
7,500
8,050
8,333
8,643
9,719

Demand
Dt
Forecast
Ft

10

15

95
11
8
44
85
75
33
42

95
53
38
39
49
53
50
49

TSt

1.00
2.00
2.21
-0.93
0.40
1.56
0.29
-1.52

Figure7.6

Tahoe Salt Forecasts Using Simple Exponential Smoothing

Period t

Demand
Dt

0
1
2
3
4
5
6
7
8
9
10
11
12

8,000
13,000
23,000
34,000
10,000
18,000
23,000
38,000
12,000
13,000
32,000
41,000

alpha

Level Lt Forecast Ft Error Et

22,083
20,675
19,908
20,217
21,595
20,436
20,192
20,473
22,226
21,203
20,383
21,544
23,490

22,083
20,675
19,908
20,217
21,595
20,436
20,192
20,473
22,226
21,203
20,383
21,544
23,490
23,490
23,490
23,490

14,083
7,675
-3,093
-13,783
11,595
2,436
-2,808
-17,527
10,226
8,203
-11,617
-19,456

Absolute Error
At

Mean Squared Error

MSEt

14,083
7,675
3,093
13,783
11,595
2,436
2,808
17,527
10,226
8,203
11,617
19,456

198,340,278
128,622,951
88,936,486
114,196,860
118,246,641
99,527,532
86,435,714
114,031,550
112,979,315
108,410,265
110,824,074
133,132,065
11,538

0.1

45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0

Demand
Forecast

10 11 12

MADt
14,083
10,879
8,284
9,659
10,046
8,777
7,925
9,125
9,247
9,143
9,368
10,208
12761

% Error MAPEt
176
59
13
41
116
14
12
46
85
63
36
47

176
118
83
72
81
70
62
60
62
63
60
59

TSt
1.00
2.00
2.25
0.51
1.64
2.15
2.03
-0.16
0.95
1.86
0.58
-1.38

Figure7.7

Forecasts Using Trend-Corrected Exponential Smoothing (Holt's Model)

Period t

Demand
Dt

Level Lt

Trend
Tt

0
1
2
3
4
5
6
7
8
9
10
11
12

8,000
13,000
23,000
34,000
10,000
18,000
23,000
38,000
12,000
13,000
32,000
41,000

12,015
13,008
14,301
16,439
19,594
20,322
21,570
23,123
26,018
26,262
26,298
27,963
30,443

1,549
1,438
1,409
1,555
1,875
1,645
1,566
1,563
1,830
1,513
1,217
1,307
1,541

alpha
Beta

Forecast
Ft
13,564
14,445
15,710
17,993
21,469
21,967
23,137
24,686
27,847
27,775
27,515
29,270
31,985
33,526
35,067
36,609

Error Et
5,564
1,445
-7,290
-16,007
11,469
3,967
137
-13,314
15,847
14,775
-4,485
-11,730

Absolute Error
At
Mean Squared Error MSEt MADt % Error MAPEt
5,564
1,445
7,290
16,007
11,469
3,967
137
13,314
15,847
14,775
4,485
11,730

0.1
0.2

45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0

Demand
Forecast

10 11 12

30,958,096
16,523,523
28,732,318
85,603,146
94,788,701
81,613,705
69,957,267
83,369,836
102,010,079
113,639,348
105,137,395
107,841,864

5,564
3,505
4,767
7,577
8,355
7,624
6,554
7,399
8,338
8,981
8,573
8,836

70
11
32
47
115
22
1
35
132
114
14
29

70
40
37
39.86
54.83
49.36
42.39
41.48
51.54
57.75
53.78
51.68

TSt
1
2
0
-2.15
-0.58
-0.11
-0.11
-1.90
0.22
1.85
1.41
0.04

hlts-regr

HOLT'S MODEL REGRESSION SUMMARY OUTPUT

Regression Statistics
Multiple R 0.4813272
R Square
0.2316759
Adjusted R Square
0.1548435
Standard Error
10666.883
Observations
12
ANOVA
df
Regression
Residual
Total

1
10
11

SS
MS
343092657.3 343092657.3
1137824009 113782400.9
1480916667

F
Significance F
3.01534 0.113127

Coefficients Standard Error

t Stat
P-value Lower 95% Upper 95%Lower 95.0%
Upper 95.0%
Intercept
12,015
6565.012894 1.830179424 0.097147 -2612.611 26642.91 -2612.611 26642.91
X Variable 1
1,549
892.0095994
1.73647352 0.113127 -438.5705 3536.473 -438.5705 3536.473

b, estimate of demand
and level at t=0

a, estimate of trend at
t=0

deseasonalized

Forecasts Using Trend and Seasonality Corrected Exponential Smoothing)

Deseasonalizing Demand
Period
t

Deseasonalized Deseasonalized
Demand
Demand Demand
(Eqn 7.2) D t
(Eqn 7.3)
Dt
Dt

1
2
3
4
5
6
7
8
9
10
11
12

8,000
13,000
23,000
34,000
10,000
18,000
23,000
38,000
12,000
13,000
32,000
41,000

18,963
19,487
20,010
20,534
21,058
21,582
22,106
22,629
23,153
23,677
24,201
24,725

19,750
20,625
21,250
21,750
22,500
22,125
22,625
24,125

45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0

Seasonal Factor Estimate

(Eqn 7.5) S t
(Eqn 7.6) S i
0.42
0.67
1.15
1.66
0.47
0.83
1.04
1.68
0.52
0.55
1.32
1.66

Demand
Deseasonlized
Demand

11

0.47
0.68
1.17
1.66

Sheet2

WINTER'S MODEL REGRESSION SUMMARY OUTPUT

Regression Statistics
Multiple R
0.9580652
R Square
0.917889
Adjusted R Square 0.9042038
Standard Error
414.50331
Observations
8
ANOVA
df
Regression
Residual
Total

Intercept
X Variable 1

SS
MS
F
Significance F
1 11523809.5 11523809.5 67.07182 0.000179
6 1030877.98 171812.996
7 12554687.5

CoefficientsStandard Error
t Stat
P-value Lower 95% Upper 95%Lower 95.0%
Upper 95.0%
18,439 440.808708 41.8299089 1.25E-08 17360.37 19517.61 17360.37 19517.61
524 63.9592497 8.18973841 0.000179 367.3068 680.3123 367.3068 680.3123

initial estimate of

initial estimate of

Figure7.8

Forecasts Using Trend and Seasonality Corrected Exponential Smoothing)

Period t
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
alpha
Beta
Gamma

Demand
Trend
Dt
Level Lt
Tt
8,000
13,000
23,000
34,000
10,000
18,000
23,000
38,000
12,000
13,000
32,000
41,000

0.05
0.1
0.1

18,439
18,866
19,367
19,869
20,380
20,921
21,689
22,102
22,636
23,291
23,577
24,271
24,791

524
514
513
512
512
515
540
527
528
541
515
533
532

Seasonal Factor
St
0.47
0.68
1.17
1.67
0.47
0.68
1.17
1.67
0.47
0.69
1.16
1.67
0.47
0.68
1.17
1.67

Forecast
Absolute Error
Ft
Error Et
At
8,913
13,179
23,260
34,036
9,723
14,558
25,981
37,787
10,810
16,544
27,849
41,442
11,940
17,579
30,930
44,928

913
179
260
36
-277
-3,442
2,981
-213
-1,190
3,544
-4,151
442

913
179
260
36
277
3,442
2,981
213
1,190
3,544
4,151
442

Mean Squared
Error MSEt
832,857
432,367
310,720
233,364
202,036
2,143,255
3,106,508
2,723,856
2,578,653
3,576,894
4,818,258
4,432,987

50,000
40,000
30,000

Demand

20,000

Forecast

10,000

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

MADt % Error MAPEt

913
546
450
347
333
851
1,155
1,037
1,054
1,303
1,562
1,469

11
1
1
0
3
19
13
1
10
27
13
1

11.41
6.39
4.64
3.50
3.36
5.98
6.98
6.18
6.59
8.66
9.05
8.39

TSt
1.00
2.00
3.00
4.00
3.34
-2.74
0.56
0.42
-0.72
2.14
-0.87
-0.63

Forecast Errors for Tahoe Salt Forecasting

Forecasting Method
Four-period moving average
Simple exponential smoothing
Holt's model
Winter's model

MAD
9,719
10,208
8,836
1,469

MAPE(%)
49
59
52
8

TS Range
Min
Max
-1.52
2.21
-1.38
2.25
-2.15
2.00
-2.74
4.00