Quarter Year 1 Year 2 Year 3 Year 4 Year 5 1 24850 22130 217

Quarter

Year 1

Year 2

Year 3

Year 4

Year 5

1

24,850

22,130

21,705

16,039

19,236

2

21,300

18,711

17,012

18,526

16,778

3

19,500

19,602

18,326

20,087

4

24,422

23,005

22,639

23,236

Compute a 4-Quarter moving average forecast for Qtr. 3 of Year 5 (round to the nearest unit)

Compute a 3-Quarter weighted moving average forecast for Quarter 3 of Year 5. Use these weights: 7 on the prior quarter, and then 4 and 1 (respectively) on quarters prior to that (rounded to the nearest unit).

Use exponential smoothing method with = 0.33 to forecast demand in Quarter 3 of Year 5. Assume Forecast for Q1 of Year 1= 24,850. Round off the final answer to nearest integer.

Examine the 3 methods you used in the previous 3 problems. Which is best to use for this time series?

Solution

4-Quarter moving average forecast for Qtr. 3 of Year 5 gives value

(19,500 +

19,602 +

18,326 +

20,087) /4 = 19379

3-Quarter weighted moving average forecast for Quarter 3 of Year 5 using the given weights gives =19460

Exponential Smoothing

with alpha = 0.333 gives 18735.97