Problem Solving 2 (FORECASTING):
1. Given the following data:
Period
Number of
Complaints
1
60
2
65
3
55
4
58
5
64
Prepare a forecast for period 6 using each of these approaches:
a. The appropriate naive approach.
b. A three-period moving average.
c. A weighted average using weights of .50 (most recent), .30, and .20.
d. Exponential smoothing with a smoothing constant of .40.
2. A food processing company uses a moving average to forecast next month’s demand. Past
actual demand (in units) is as shown in table below:
Month
Actual Demand
43
105
44
106
45
110
46
110
47
114
48
121
49
130
50
128
51
137
a) Compute a simple 5 – month moving average to forecast demand for month 52.
b) Compute a weighted 3-month moving average, where the weights are highest for
the latest months and descend in order of 3, 2, and 1.
3. Plot the data on a graph, and verify visually that a linear trend line is appropriate. Develop a
linear trend equation for the following data. Then use the equation to predict the next two
values of the series.
Period
Demand
1
44
2
52
3
50
4
54
5
55
6
55
7
60
8
56
9
62