CARIAGA, Israfel T.

(BS-ENTREP)
ACTIVITY 2 FOR FINALS
INSTRUCTIONS:  Use quantitative forecast methods for the data shown below. Show complete
solutions.

Period 1 2 3 4 5 6 7

Observation 24 34 36 37 41 44 45

 
Compute for:

1. Naive method
2. Three-period moving average
3. Three -period Weighted Moving Average
4. Average Arithmetic of growth rate Method

1. NAIVE METHOD

Period Demand Forecast

1 24
2 34 24
3 36 34
4 37 36
5 41 37
6 44 41
7 45 44

2. THREE-PERIOD MOVING AVERAGE

Period Actual Demand Forecast

1 24
2 34
3 36
4 37
5 41 (24+34+36+37) ÷4= 32.75
6 44 (34+36+37+41) ÷4= 37
7 45 (36+37+41+44) ÷4= 39.5

3. THREE-PERIOD WEIGHTED MOVING AVERAGE

 Period Demand
1 24
2 34
3 36
4 37
5 41
6 44
7 45
4. AVERAGE ARITHMETIC OF GROWTH RATE METHOD
Year Sales in Million
1 24
2 34
3 36
4 37
5 41
6 44
7 45
Average growth rate=∑%growth rate÷
number of periods covered= 70.73 ÷ 6
Average growth rate= 11.79%
Forecast
[(36x3) +(34x2) +(24x1) ÷6= 33.33
[(37x3) +(36x2) +(34x1) ÷6= 36.17
[(41x3) +(37x2) +(36x1) ÷6= 38.83
[(44x3) +(41x2) +(37x1) ÷6= 41.83
% growth rate
[(34-24) ÷24] x100 = 41.67
[(36-34) ÷34] x100 = 5.88
[(37-36) ÷36] x100 = 2.78
[(41-37) ÷37] x100 = 10.81
[(44-41) ÷41] x100 = 7.32
[(45-44) ÷44] x100 = 2.27
∑%growth rate= 70.73