Simbala, Andi Te’a Mari O.

Activities/Assessments:
Activity 8
The following table represents sales data for milk (in hundred liters) sold by a grocery. Do the computations to
fill out the table and answer the following questions:
1. Using MAD as the criterion, which of the following models would you use for the given time series data?
Why?
A. Naïve approach;
B. 5-month SMA model;
C. WMA model with weights 0.1, 0.3, and 0.6; or
D. ES model with α = 0.5 and a forecast of 3,500 liters in the first month.
NOTE: In answering Item 1, mention the whole description of the model; i.e., not just “SMA model”, but “SMA
model with n = …”; not just “WMA model”, but “WMA model with weights …”; not just “ES model”, but “ES
model with α = …”.
2. Interpret the MAD of the most accurate among the forecasting models above.
3. Based on your decision in Item 1, what should be the forecast for Month 11?

ANSWERS:

Actual 100 Liters

Demand NA SMA WMA ES
Month 100 L F |A-F| F |A-F| F |A-F| F |A-F|
1 39             35.0  
2 47 39           37.0  
3 39 47           42.0  
4 44 39       41.4   40.5  
5 49 44       42.8   42.3  
6 48 49 1 43.6 4.4 46.5 1.5 45.6 2.4
7 45 48 3 45.4 0.4 47.9 2.9 46.8 1.8
8 56 45 11 45 11 46.3 9.7 45.9 10.1
9 53 56 3 48.4 4.6 51.9 1.1 51.0 2.0
10 61 53 8 50.2 10.8 53.1 7.9 52.0 9.0
11 61   52.6   58.1   56.5  
MAD 5.2 6.24 4.62 5.07

1. I would recommend the WMA model with weights 0.1, 0.3 and 0.6 as the forecasting model to be used
because it has the lowest MAD, which means that it is the model that gives the most accurate forecasts
for the time series data.
2. On the average, the demand forecast generated by WMA model deviates from the actual demand by
4,620 liters.
3. Based from my decision from item 1, the forecast for month 11 using the WMA model with weighs 0.1,
0.3, and 0.6 is 58.1 or 5,810 liters.