Exponential Moving

Average

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 “
It invovles collections of only the latest
sales and forecast figures.
F1=Ft-1 + a (St-1 – Ft-1)

F1= Forecast this period

Ft-1 = Forecast last period
a = Weight or smoothing constant with value ranging from 0 to 1
St-1 = Sales last period

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 EXAMPLE

 Forecast sales for month of May using

exponential smoothing given that April forecast
is 36 units and a=0.80.
MONTH SALES

Jan 24 May Forecast = 36 + 0.8 (35 – 36)

= 36 – 0.8
Feb 28

March 33
= 35.2 units
April 35

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Trend Projection

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 “
A time-series forecasting method that
uses the least square method to
develop trend equation which will be
used to forecast.

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 Y = a + bX

b= Y = forecast for the period

X = number of time periods
a = Value of Y at X = 0 (Y intercept)
b = Slope of the line

a=

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Develop a trend equation for firm A, Given its sales data hereunder, and forecast demand for year 2005.
YEAR (X) Copier Sales XY b=
(Y) a=

1990 (1) 200 1 200

b=
1991 (2) 209 4 418
1992 (3) 220 9 660 = = 10.5
1993 (4) 235 16 940
a = 231.43 – 10.5(4)
1994 (5) 243 25 1,215
1995 (6) 250 36 1,500 = 189.43

1996 (7) 263 49 1,841

Y = a + bX
2005 (16) ? - -
Year2005= 189.43+10.5(16)
= 28 = 1,620 = 140 = 6,774
= 357.43
=4 = 231.43 - -
Develop a trend equation for firm A, Given its sales data hereunder, and forecast demand for year 2005.
YEAR (X) Copier Sales XY b=
(Y) a=

1990 (-3) 200 9 -600

b=
1991 (-2) 209 4 -418
1992 (-1) 220 1 -220 = 10.5 a = 231.43
1993 (0) 235 0 0
1994 (1) 243 1 243 Y = a + bX
1995 (2) 250 4 500
Year2005= 231.43+10.5(12)
1996 (3) 263 9 789
2005 ? - -
= 357.43

=0 = 1,620 = 28 = 294
=0 =231.43 - -