Your Manager is trying to determine what forecasting method to use. Based upon the following historical data, calculate the following forecast and specify what procedure you would utilize. MONTHACTUAL
DEMAND
163
266
368
469
570
672
773
873
973
1076
1185
1280
a) Calculate the simple three-moving average forecast for periods 4-12.
b) Calculate the weighted three-moving average using the following sets of weights :
1) 0.50, 0.30, and 0.20 for periods 4-12.
2) 0.40, 0.35, and 0.25 for periods 4-12.
3) 0.60, 0.25, and 0.15 for periods 4-12.
c) Calculate the single exponential smoothing forecast for periods 2-12 using the following information:
1) Initial forecast (F1) of 61 and an alpha of 0.10.
2) Initial forecast (F1) of 61 and an alpha of 0.20.
3) Initial forecast (F1) of 61 and an alpha of 0.30.
d) Calculate the forecast for periods 4-12 using simple linear regression using Excel.
e) Calculate the mean absolute deviation (MAD) and Mean square error (MSE) for all the previous forecasts made by each technique for the periods 4-12. Which forecasting method do you recommend to use?