ABM 322 (Managerial Economics)

MIDTERM EXAMINATION (Part B)

NAME: Pacunayen, Irene A.

SECTION: BSAB 4

INSTRUCTION: Answer the following questions and submit via Google classroom not later than Friday,
May 10, 2021.

A chocolate manufacturer has the following historical sales data:,

YEAR Annual peso sales(Millions)

2016 2
2017 6
2018 4
2019 5
2020 3
2021 10
1. Forecast the company’s sales for 2022 using

a. 3 year moving average

YEAR Annual peso 3-year moving 3-year moving

sales(Millions) total total average
2016 2 N/A
2017 6 N/A
2018 4 N/A
2019 5
2020 3
2021 10
2022 5+3+10=18 18/3=6
ANSWER: Forecast the company’s sales for 2022 using 3 year moving average will be 6 Million
pesos

b. Exponential smoothing using a smoothing constant α =0.10. The forecast for 2016 = 3 million

YEAR Annual peso sales(Millions) Forecast

2016 2
2017 6 3+0.10(2-3)=2.9
2018 4 2.9+0.10(6-2.9)=3.21
2019 5 3.21+0.10(4-3.21)=3.29
2020 3 3.29+0.10(5-3.29=3.46
2021 10 3.46+0.10(3-3.46)=3.41
3.41+0.10(10-3.41)=4.07
ANSWER: Forecast the company’s sales for 2022 exponential smoothing will be 4.07 Million pesos
2. Using the same sales data in No. 1,

a. Determine the equation of the trend line.

YEAR Annual peso sales(Millions) X XY X2

Y
2016 2 1 2 1
2017 6 2 12 4
2018 4 3 12 9
2019 5 4 20 16
2020 3 5 15 25
2021 10 6 60 36
2
TOTAL ΣY= 30 ΣX=21 ΣXY=121 ΣX = 91

6 ( 121 )−21(30)
= 2 = 0.91
6 ( 91 )−21

30
6
−0.91 ( )
21
6
=1.815

ANSWER: The trend line equation: Y’ = 1.815 + 0.91t

b. Interpret what the values of intercept a and slope b mean.

ANSWER: Interpreting the trend line Y’ = 1.815 + 0.91t , the value of the Y intercept, 1.815
means the estimated sales for Year (201 5) is 1.815 million peso . The slope = 0.91 indicates
that sales increased by 0.91 million peso every year.

c. Forecast sales for years 2022 and 2023

Sales in 2022= Y’ = 1.815 + 0.91(7)

= 8.185 million pesos

Sales in 2023= Y’ = 1.815 + 0.91(8)

= 9. 095 million pesos