NATIONAL INSTITUTE OF TECHNOLOGY CALICUT

Department of Mechanical Engineering

ME3102D Management of Production Systems
Tutorial Worksheet 1 – Forecasting
Monsoon 2022-23
Marks: 20
1. The demand for a product in each of the last five months is shown below. [3]

Month 1 2 3 4 5
Demand (‘00s) 13 17 19 23 24

(a) Use a two month moving average to generate a forecast for demand in the sixth
month.
(b) Apply exponential smoothing with a smoothing constant of 0.9 to generate a forecast
for demand for demand in the sixth month.
(c) Estimate mean squared deviation and state which of these two forecasts do you
prefer and why?

2. An Office stationery supply firm sells and delivers office supplies to companies, schools, [9]
and agencies within a 50-mile radius of its warehouse. The office supply business is
competitive, and the ability to deliver orders promptly is a big factor in getting new
customers and maintaining old ones. (Offices typically order not when they run low on
supplies, but when they completely run out. As a result, they need their orders
immediately.) The manager of the company wants to be certain that enough drivers and
vehicles are available to deliver orders promptly and that they have adequate inventory
in stock. Therefore, the manager wants to be able to forecast the demand for deliveries
during the next month. From the records of previous orders, management has
accumulated the following data for the past 10 months:

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Orders 120 90 100 75 110 50 75 130 110 90

(a) Compute the monthly demand forecast for February through November using the
naive method.
(b) Compute the monthly demand forecast for April through November using a 3-
month moving average.
(c) Compute the monthly demand forecast for June through November using a 5-
month moving average.
(d) Compute the monthly demand forecast for April through November using a 3-
month weighted moving average. Use weights of 0.5, 0.33, and 0.17, with the
heavier weights on the more recent months.
(e) Use exponential smoothing with smoothing parameter α = 0.3 to compute the
demand forecast for April through November.
(f) Compute the mean absolute deviation for June through October for each of the
methods used. Which method would you use to forecast demand for November?

3. The demand for a new aftershave in a shop for each of the last 7 months is given below. [8]

Month Jan Feb Mar Apr May Jun Jul

Orders 23 29 33 40 41 43 49
(a) Apply a two month moving average for months February to July. What would
be your forecast for the demand in the month of August?
(b) Apply exponential smoothing with a smoothing constant of 0.1 to derive a
forecast for the demand in the month of August.
(c) Which of the two forecasts for month of August do you prefer and why?
(d) If there is a scenario where the shop keeper believes that customers are
switching to this new aftershave from other brands. Discuss how you might
model this switching behaviour and indicate the data that you would require to
confirm whether this switching is occurring or not.

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