Name: Abegail G.

Sadia Student Number: 19-1-00059

Course and Year: BSIE 3 Class Schedule: MWF 1:00 – 2:00
Mobile Number: 09675318378 Semester and SY: 2nd Sem 2021-2022

IEng 164 – Operations Management

Learning Task No. 3.3

Module 3: Forecasting

1. Give one example product that usually shows a linear trend, exponential trend,
and seasonality. Explain why do these product’s demand behave that way.
2. Do you think that the demand of products from November 2013 – November 2014
shows irregular variations? Support your answer. (It is preferable if you can provide
a graphical figure from articles or researches in the internet.)

Answer:

1. Linear Trend – basic necessities like foods are example of linear trend since
consumer purchase food daily.
Exponential trend – Shopee is an example of exponential trend since people
nowadays are using technology and because of pandemic, most of the consumers
prefer to shop online.
Seasonality – Christmas decorations is an example of seasonality trend.
Consumers usually purchase decorations during BER-months. that is the time
when trend goes upward then go downward after December.
2. Yes, this is because of seasonal. Sale curve changes throughout the year. This
depends on the factors like occasion, population shift, demand of the market,
prices, and others. The chart below shows irregular variation of Existing Home
Sale (NSA). It also changes every year because of the factors. In 2005 (green), it
goes upward until June, then downward and upward shift. the article says that most
industries have seasonal business trend. This implies that propensity of customers
to buy a product is biased toward certain period in a year.
source: Tavish (2013). Festive Season Special: Building Models on Seasonal Data. Analytics
Vidhya. Retrieved: https://www.analyticsvidhya.com/blog/2013/10/methods-tackle-seasonal-
models/

Learning Task

From the table above show the computation how the period 4 and 5 were
forecasted in the Three – Week simple moving average.

Answer: Period 4

𝐴𝑡−1 + 𝐴𝑡−2 + 𝐴𝑡−3 + ⋯ + 𝐴𝑡−𝑛

𝐹𝑡 =
𝑛

800 + 1400 + 1000

=
3

= 𝟏𝟎𝟔𝟔. 𝟔𝟔𝟔𝟕 𝒐𝒓 𝟏𝟎𝟔𝟕

Period 5

𝐴𝑡−1 + 𝐴𝑡−2 + 𝐴𝑡−3 + ⋯ + 𝐴𝑡−𝑛

𝐹𝑡 =
𝑛

1400 + 1000 + 1500

=
3

= 𝟏𝟑𝟎𝟎

Learning Task

Do the graphs above prove that the averaging technique smooth variations in the
data? If yes, support your answer through comparison of the three graphs.

Answer: Yes, moving average can be used in statistical modeling to smooth variation in
the data and expose underlying trends, and identify components. 3-week periods is more
closely to actual demand compared to 9-week periods. However, 9-week periods have
smoother result compared to 3-week periods.

Learning Task

Discuss the difference in forecasting using forward end and centered moving average.

Answer: Forward forecasting is used to influence the future rather than foretell it. It
estimates or offer an educated judgment on what to expect, which helps to reduce
surprises. Centered moving average, on the other hand, places the average in the middle
of the ranges rather than the end of it.

Learning Task

What do you think is the clear distinction between moving average and weighted
moving average?

Answer: The weightings in a simple moving average are evenly distributed. The average
closing prices for a given period are used to calculate it. Weighted moving averages, on
the other hand, give more weight in recent data points because they are more relevant
than data from the past.

Learning Task

1. Looking at table above write your observation on the forecasted value on the
second period. What forecasting method is used on the second period?
2. By using the formula of exponential smoothing check if the forecasted values on
the third, fourth, and fifth period are correct. Show your solution

Answer:

1. Based on the table above, second period uses exponential smoothing since the
value is based on the previous forecast and the percentage of the forecast error.
2. Third period: 𝛼 = .10 𝐹𝑡 = 𝐹𝑡−1 + 𝛼(𝐴𝑡−1 − 𝐹𝑡−1 )
= 42 + .10(40 − 42)

= 𝟒𝟏. 𝟖

Third period: 𝛼 = .40 𝐹𝑡 = 𝐹𝑡−1 + 𝛼(𝐴𝑡−1 − 𝐹𝑡−1 )

= 42 + .40(40 − 42)

= 𝟒𝟏. 𝟐

Fourth period: 𝛼 = .10 𝐹𝑡 = 𝐹𝑡−1 + 𝛼(𝐴𝑡−1 − 𝐹𝑡−1 )

= 41.8 + .10(43 − 41.8)

= 𝟒𝟏. 𝟗𝟐

Fourth period: 𝛼 = .40 𝐹𝑡 = 𝐹𝑡−1 + 𝛼(𝐴𝑡−1 − 𝐹𝑡−1 )

= 41.2 + .40(43 − 41.2)

= 𝟒𝟏. 𝟗𝟐

Fifth period: 𝛼 = .10 𝐹𝑡 = 𝐹𝑡−1 + 𝛼(𝐴𝑡−1 − 𝐹𝑡−1 )

= 41.92 + .10(40 − 41.92)

 = 𝟒𝟏. 𝟕𝟑

Fifth period: 𝛼 = .40 𝐹𝑡 = 𝐹𝑡−1 + 𝛼(𝐴𝑡−1 − 𝐹𝑡−1 )

= 41.92 + .40(40 − 41.92)

= 𝟒𝟏. 𝟏𝟓

Learning Task

Check and show your solution if the values below are correct.

b = 7.51, a= 699.40

Ft = 699.40 +7.51t, where t=0 for period 0

answer:

𝑛 ∑ 𝑡𝑦 − ∑ 𝑡 ∑ 𝑦
𝑏=
𝑛 ∑ 𝑡 2 − (∑ 𝑡)2

10(41358) − (55 × 7407)

=
10(385) − (55)2

= 𝟕. 𝟓𝟎𝟗 𝒐𝒓 𝟕. 𝟓𝟏

∑𝑦 − 𝑏∑𝑡
𝑎=
𝑛

7407 − (7.51 × 55)

=
10

= 𝟔𝟗𝟗. 𝟑𝟗𝟓 𝒐𝒓 𝟔𝟗𝟗. 𝟒𝟎

𝐹𝑡 = 𝑎 + 𝑏𝑡

= 699.40 + 7.51(0)

= 𝟔𝟗𝟗. 𝟒𝟎
Learning Task

The sale of a small grocery chain since 2009 are reflected below:

Year Sales ($ millions)

2009 $7
2010 10
2011 9
2012 11
2013 13
How much are sales increasing each year? What is the forecasted sale for 2015?

Answer:

t t2 y ty
1 1 7 7
2 4 10 100
3 9 9 27
4 16 11 44
5 25 13 65
∑ 𝑡=15 ∑ 𝑡 2 =55 ∑ 𝑦=50 ∑ 𝑡𝑦=243
𝑛 ∑ 𝑡𝑦 − ∑ 𝑡 ∑ 𝑦
𝑏=
𝑛 ∑ 𝑡 2 − (∑ 𝑡)2

5(243) − (15 × 50)

=
5(55) − (15)2

= 𝟗. 𝟑

∑𝑦 − 𝑏∑𝑡
𝑎=
𝑛

50 − (9.3 × 15)
=
5
 = −𝟏𝟕. 𝟗

𝐹𝑡 = 𝑎 + 𝑏𝑡

= −17.9 + 9.3(0)

= −𝟏𝟕. 𝟗

𝐹𝑡 = 𝑎 + 𝑏𝑡

= −17.9 + 9.3(7)

= 𝟒𝟕. 𝟐

There are 9.3 sales increase each year. For 2015, the forecasted sale is 47.2

Learning Task

Assume that in the past years, a firm sold an average of 1,000 units of a particular
product line each year. On the average, 200 units were sold in the spring, 350 in the
summer, 300 in the fall, and 150 in the winter.

Seasonal factor (or index) = amount sold during each season/average for all
season

1. Find the seasonal factor for each season.

2. Using these factors, if we expected demand for next year to be 1,100 units,
compute the next year’s seasonal forecast by filling out the table below.

Expected Average Sales Seasonal Next Year’s

Demand for for Each Factor Seasonal
Next Year Season Forecast
Spring - 275 200/250 = 0.8 220
Summer - 275 350/250 = 1.4 385
 Fall - 275 300/250= 1.2 330
Winter - 275 150/250 = 0.6 165
Total 1,100

Learning Task

1. What is the formula for moving average?

2. Based from the table above, why does the forecasted of period 7 (using moving
average) is placed at period 4 using centered – moving average?

Answer:

1. The formula of moving average is

𝐴𝑡−1 + 𝐴𝑡−2 + 𝐴𝑡−3 + ⋯ + 𝐴𝑡−𝑛

𝐹𝑡 =
𝑛
2. Period 7 from moving average is placed at period 4 in centered moving average
because it is place at the center of the range. For a moving average length of 6,
for instance, the first numeric moving average value is entered at period 7, the
second at period 8, and so on. Then, the value in the period 7 in moving average
is placed at period 4 of centered moving average. Basically, a centered moving
average depends on moving average.