Chapter 18: Forecasting

1. Given the following historical data and weights of 0.5, 0.3, and 0.2, what is the three-period
moving average forecast for period 5?

Answer:

WMA3 Period 4 = 138 (0.2) + 142 (0.3) + 148 (0.5) = 144.2

WMA3 Period 5 = 142 (0.2) + 148 (0.3) + 144 (0.5) = 144.8

2. Develop a forecast for the next period, given the data below, using a 3-period moving average.

Answer:

MA3 Period 4 = 19+20+18 = 19

3
MA3 Period 5 = 18 +19+17 = 18
3

3. A manager is using exponential smoothing to predict merchandise returns at a suburban branch of

a department store chain. Given a previous forecast of 140 items, an actual number of returns of
148 items, and a smoothing constant equal to 0.15, what is the forecast for the next period?

Answer:
4. Use exponential smoothing with trend adjustment to forecast deliveries for period 10. Let alpha =
0.4, beta = 0.2, and let the initial trend value be 4 and the initial forecast be 200.

Actual
Period Demand
1 200
2 212
3 214
4 222
5 236
6 221
7 240
8 244
9 250
10 266

5. Show you forecast using linear regression

Actual(Y)
1 200
2 212
3 214
4 222
5 236
6 221
7 240
8 244
9 250
10 266