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
mode” but “SMA model with n = …”; not just “WMA model” but “WMA model with weights …”;
not just “ES model”, “ES model with α = …”.
As it has the lowest MAD of 4.62, I would recommend using the Weighted Moving
Average model with weights of 0.1, 0.3, and 0.6 as the forecasting model to use. This model
suggests that this demonstration would provide the most accurate estimates for the time
arrangement information.

2. Interpret the MAD of the most accurate among the forecasting models above.
The Weighted Moving Average model with weights 0.1, 0.3, and 0.6 offers the most
accurate forecast because its MAD totals to 4.62, which is the least number.
MAD WMV  =(1.5 + 2.9 +9.7 + 1.1 + 7.9)/5
                =(23.1)/5
               = 4.62
The WMV model's demand forecast differs by 462 liters on average from actual demand.

3. Based on your decision in Item 1, what should be the forecast for Month 11?
Using the WMA model with weights of 0.1, 0.3, and 0.6, I recommend a demand forecast
of 58,100 liters for Month 11.