Problems

1. The Saki motorcycle dealer in the Minneapolis St. Paul area wants to make an accurate forecast of
demand for the Saki Super TXII motorcycle during the next month. Because the manufacturer is in
Japan, it is difficult to send motorcycles back or reorder if the proper number is not ordered a month
ahead. From sales records, the dealer has accumulated the following data for the past year:

Month Motorcycle Sales

January 9
February 7
March 10
April 8
May 7
June 12
July 10
August 11
September 12
October 10
November 14
December 16

a. Compute a 3-month moving average forecast of demand for April through January (of the next year).
b. Compute a 5-month moving average forecast for June through January.

2. The chairperson of the department of management at State University wants to forecast the number of
students who will enroll in production and operations management (POM) next semester, in order to determine
how many sections to schedule. The chair has accumulated the following enrollment data for the past eight
semesters:
 a. Compute a three-semester moving average forecast for semesters 4 through 9.
b. Compute the exponentially smoothed forecast (α = 0.20) for the enrollment data.

3. Emily Andrews has invested in a science and technology mutual fund. Now she is considering
liquidating and investing in another fund. She would like to forecast the price of the science and technology
fund for the next month before making a decision. She has collected the following data on the average price of
the fund during the past 20 months:

a. Using a 3-month average, forecast the fund price for month 21.

b. Using a 3-month weighted average with the most recent month weighted 0.60, the next most recent
month weighted 0.30, and the third month weighted 0.10, forecast the fund price for month 21.
 c. Compute an exponentially smoothed forecast, using a = 0.40, and forecast the fund price for month
21.
d. Using the 3 – month average, complete the table using the adjusted exponential smoothing with β =
0.35.