Dimla, Selene S.

A – 335 August 6, 2021

ASSIGNMENT ON FORECASTING
The data on the tables below are the demand in dozens of doughnuts of Krispy
Doughnuts for the past six weeks, make a forecast for week 7 using 3 month moving
average, exponential smoothing with an alpha of 0.10, and linear trend.

Exponential Smoothing here, alpha = 3-week moving average

0.10 here -------

Actual Absolute
Period Forecast Forecast Absolute Error
Demand Error

Jan 200 0 -   

Feb 256 200   56 -   

March 287 205.6 81.40 -   

April 282 213.74  68.26  247.67 34.33

May 247 220.57 26.43 275 28.00

June 252 223.21 28.79 272 20.00

July 226.09 260.33

Total 1524 260.88 82.33

Mean Absolute 52.18

Error (MAD 27.44

 
Dimla, Selene S. A – 335 August 6, 2021

SOLUTION:
Exponential Soothing

Forecast Absolute error

1. - 1. -

2. 200 2. 256 – 200 = 56

3. 256 x .0.10 + 200 x 0.90 = 205.60 3. 287 – 205.60 = 81.40
4. 287 x .0.10 + 205.60 x 0.90 = 213.74 4. 282 – 213.74 = 68.26

5. 282 x .0.10 + 213.74 x 0.90 = 220.57 5. 247 – 220.57 = 26.43

6. 247 x .0.10 + 220.57 x 0.90 = 223.21 6. 252 – 223.21 = 28.79

7. 252 x 0.10 + 223. 21 x 0.90 = 226.09

MAD = (56 + 81.4 + 68.26 + 26.43 + 28.79) / 5 = 52.18

Moving Average

Forecast Absolute error

1. (287 + 256 + 200)/3= 247.67 1. 282- 247.67 = 34.33

2. (282 + 287 + 256)/ 3= 275 2. 247- 275 = 28

3. (247 + 282 + 287)/3= 272 3. 252- 272 = 20

4. (252 + 247 + 282)/3= 260.33

MAD = (34.33 + 28 + 20)/3= 27.44

Dimla, Selene S. A – 335 August 6, 2021

  --- Perform linear trend here

Period x Actual demand (y) xy x2 Y2

Jan  1 200 200 1 40,000

Feb  2 256 512 4 65,536

March  3 287 861 9 82,369

April  4 282 1,128 16 79,524

May  5 247 1,235 25 61,009

June  6 252 1,512 36 63,504

Total  21 1,524  5,448 91 391,942

 
Y= a + bx
Y= 231.22 + 6.51x
b= 6 (5448) – 21(1524)
6 (91) - (21)2
b= 684/ 105 a= 1524 – 6.51 (21)/6
b = 6.51 a= (1524 – 136.71) /6
a= 231.22
Dimla, Selene S. A – 335 August 6, 2021

Answer the following question. Use your solution above in answering.

1. What is your forecast for week 7 using 3

 260.33
month moving average?

2. What is your forecast for week 7 using

 226.09
exponential smoothing?

 The 3 Month Moving Average

is better because its value of
27.44 is lower than the
3. Which is the better forecasting technique for Exponential Smoothing’s
the data, moving average or exponential 52.18. Remember that the
smoothing? lower the value, the lower the
risk. Therefore, the 3- Month
Moving Average is a better
technique in forecasting data.

4. Using the 3 month moving average, what  It started on the month of April
period did your forecast start? or on the 4th month.

5. If 4 month moving average is used, what  It must start on May which is
period must you start your forecast? the 5th month.

6. In exponential smoothing, to what did you

 It was multiplied to the actual
multiply the alpha of 0.10, actual demand or
demand.
forecast?

7. Given weights of 0.40 (most recent),  Week 7= (0.40 x 252) + (0.20 x

0.20,0.20 and 0.20 for the preceding periods 247) + (0.20 x 282) + (0.20 x 287)
respectively, what is the forecast for week 7
using weighted moving average? Forecast week 7 = 264

8. What is the linear trend equation?  Y= 231.22 + 6.51x

 It indicates an increasing

9. What does your slope (b) indicate,
demand because the slope is
increasing or decreasing demand?
positive.

10. Using linear trend, what is the forecast for Y= 231.22 + 6.51x
week 7?
Dimla, Selene S. A – 335 August 6, 2021

Y= 231.22 + 6.51(7)
Y= 276.79