Historical demand for a product is as follows DENAND 58 54 7

Historical demand for a product is as follows DENAND 58 54 74 58 April June July August September 73 a. Using a simple four-month moving average, calculate a forecast for October. Round your answer to 2 decimal places.) Forecast for October b. Using single exponential smoothing with -O 10 and a September recast-61, calculate a forecast for October Round your answer to 2 dec mal places. Forecast for October c.Using simple linear regression, calculate the trend line for the historical data. Say the X axis is April 1, May 2, and so on, while the Y axis is demand. (Round your intercept value to the nearest whole number and slope value to 2 decimal places.) Y: d. Calculate a forecast for October using your regression formula. (Round your answer to 2 decimal places.) Forecast for October

Solution

Forecast for October using simple 4 month moving average

= Sum of Forecasts for ( June + July +August + September) / 4

= ( 74 + 58 + 76 + 73 ) / 4

= 281/4

= 70.25

FORECAST FOR OCTOBER = 70.25

Forecasted value for October imple 4 noth

= alpha x Demand for September + ( 1 – alpha) x forecasted value for September     ( where alpha =0.1 exponential smoothing factor )

= 0.1 x 73 + 0.9 x 61

= 7.3 + 54.9

= 62.2

FORECAST FOR OCTOBER 62.2

Let the linear regression equation be :

Y = A + B.t

Where,

T ( Independent variable ) = Serial number of months ( e.g. 1 for April, 2 for May etc )

Y ( Dependent variable ) = forecasted demand

We now put all the values of serial number of months and forecasted demands as given in the problem in two different columns and apply the formula LINEST ( ) and we get following values of A and B :

B = 3.571

A = 53

Therefore,

Y = A + B.t = 53 + 3.57.t

Y = 53 + 3.57.t

Thus forecast for October :

We use value of t = 7

Therefore , forecast for October : Y = 53 + 3.57.t = 53 + 3.57 x 7 = 53 + 24.99 = 77.99

FORECAST FOR OCTOBER = 77.99

FORECAST FOR OCTOBER = 70.25