Feb Mar Apr May Jun Jul Aug Units Sold 1507 1233 1198 1426 1

Feb Mar Apr May Jun Jul Aug Units Sold 1507 1233 1198 1426 1629 1374 1282 Given these sales figures over the last 7 months, your boss needs you to create a forecast model that can be used to forecast sales in the future. Use three different forecasting methods (last period, 2 period moving average and 3 period moving average) to determine which forecasting method would be best to forecast future sales. For your measure of \"best\", recommend the company use the method with the mean forecast error (MFE) closest to zero. a) Calculate the MFE for each of the 3 forecasting techniques (6 points). B) After you have selected the best forecasting method, what would you tell your boss is the forecasted sales for September? (2 points).

Solution

Units sold 1507 1233 1198 1426 1629 1374 1282 9649 Forcast Last period 1507 1233 1198 1426 1629 1374 1282 9649 Diff. -274 -35 228 203 -255 -92 -225 2 period 1370 1215.5 1312 1527.5 1501.5 1328 Diff. -172 210.5 317 -153.5 -219.5 -17.5 Least difference 3 period moving avg. 1312.667 1285.667 1417.667 1476.333 1428.333 Diff. 113.3333 343.3333 -43.6667 -194.333 218.6667 Hence forecast with minimum error = 1328