PEB 702 Engineering & Society

BE Year 3, Semester 1 2019

Sit work/tutorial exercise #2 Forecasting: (30marks)
Friday :8-10
Instructions: Solve all the problems using the required forecasting methods
Problem 1. (10 marks)
Use the sales data given in the table to:
I. determine the linear trend line
II. the predicted values for 2008 sales
III. Compute for the MAD
IV. Plot the yearly sales data

Year Sales (Units)

2001 100
2002 110
2003 122
2004 130
2005 139
2006 152
2007 164

To minimize computations, transform the value of x (time) to simpler numbers. In this case,
designate year 2001 as year 1, 2002 as year 2, etc.
Problem 2. (5 marks)
A firm uses simple exponential smoothing with to forecast demand. The forecast for the week
of January 1 was 500 units whereas the actual demand turned out to be 450 units. Calculate the
demand forecast for the week of January 8.

Problem 3. (5 marks)
Given the yearly demand data, forecast the demand for years 1- 6 using smoothing constants of
α=0.6 and α=0.9 and their respective MAD . Assume F1=41.

Year Demand
1 45
2 50
3 52
4 56
5 58
6 ?

SIT WORK #2 group Friday Page 1 of 2

Problem 4. (5 marks)
Using the data in problem 3, compute for the 3 year moving average forecasts and the MAD.

Problem 5. (5 marks)
Using the data in problem 3, Compute for the monthly forecast for year 4 through Year 6 using
a 3 year weighted moving average. Use weights of 0.7, 0.2 and 0.1. Solve for MAD.

END of sit work # 2 .

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