Assignment 3

Operations Management
Chapter 4: Forecasting

Q1: Income at the architectural firm Spraggins and Yunes for the period February to July was as follows:

Month February March April May June July

Income (in $ 70.0 68.5 64.5 71.7 71.3 72.8
thousand)

Use trend-adjusted exponential smoothing to forecast the firm’s August income. Assume that the initial
forecast average for February is $65,000 and the initial trend adjustment is 0. The smoothing constants
selected are α = .1 and β =.2.

Q2: Daily high temperature in St. Louis for the last week were as follows: 93, 94, 93, 95, 96, 88, 90
(yesterday).

a) Forecast the high temperature today, using a 3-day moving average.

b) Forecast the high temperature today, using a 2-day moving average.
c) Calculate the mean absolute deviation based on a 2-day moving average.
d) Compute the mean squared error for the 2-day moving average
e) Calculate the mean absolute percent error for the 2-day moving average.

Q3: George Kyparisis owns a company that manufactures sailboats. Actual demand for Georg’s sailboats
during each of the past four seasons was as follows:

Year
Seasons 1 2 3 4
Winter 1400 1200 1000 900
Spring 1500 1400 1600 1500
Summer 1000 2100 2000 1900
Fall 600 750 650 500

George has forecasted that annual demand for his sailboats in year 5 will equal 5600 sailboats. Based on
this data and the multiplicative seasonal model, what will the demand level be for George’s sailboats in
the spring of year 5?