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Forecasting Techniques for Managers

This document provides four exercises on forecasting techniques: 1. Forecast weekly pizza demand for June 23 to July 14 using simple and weighted moving averages, and calculate the MAD for each method. 2. Forecast monthly unit demand from June to January using exponential smoothing, calculate the absolute percentage error and MAD. 3. Forecast electrical power demand for 2004 using trend projection and graph the trend line. 4. Use regression analysis to forecast construction company sales based on local payroll, compute sales at $6B payroll, and the correlation coefficient and coefficient of determination.

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Ash Vina
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485 views2 pages

Forecasting Techniques for Managers

This document provides four exercises on forecasting techniques: 1. Forecast weekly pizza demand for June 23 to July 14 using simple and weighted moving averages, and calculate the MAD for each method. 2. Forecast monthly unit demand from June to January using exponential smoothing, calculate the absolute percentage error and MAD. 3. Forecast electrical power demand for 2004 using trend projection and graph the trend line. 4. Use regression analysis to forecast construction company sales based on local payroll, compute sales at $6B payroll, and the correlation coefficient and coefficient of determination.

Uploaded by

Ash Vina
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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FORECASTING

Exercise 1

The manager of a general pizza shop must forecast weekly demand for special pizzas so that
he can order the ingredients weekly. Recently the demand for Pizzas has been as follows:

Week of Pizzas
June 2 50
June 9 65
June 16 52
June 23 56
June 30 55
July 7 60

a) Forecast the demand for pizza for June 23 to July 14 by using the simple moving
average method with n=3. Then repeat the forecast by using weighted moving
average method with n=3 and weights of 0.5, 0.3 and 0.2 with 0.5 applying to the
most recent demand.
b) Calculate and compare the MAD for each method.

Exercise 2

The monthly demand for units manufactured by a company has been as follows:

Month Units
May 100
June 80
July 110
August 115
September 105
October 110
November 125
December 120

a) Use the exponential smoothing method to forecast the number of units for June to
January. The initial forecast for May was 105 units, α=0.2.
b) Calculate the absolute percentage error for each month from June through
December and the MAD of forecast error as of end of December.

1
Exercise 3

The demand for electrical power over the period 1997 to 2003 is shown the table below in
Megawatts. Forecast the demand for year 2004 using Trend projection. On a graph draw the
trend line.

Year Electrical power


demand
1997 74
1998 79
1999 80
2000 90
2001 105
2002 142
2003 122

Exercise 4

A construction company that renovates old homes in a specific area has found that its dollar
volume of renovation work is dependent on the local area payroll. The following table lists
the revenue or sales of the construction company and the amount of money earned by
wage earners in that area during the past 6 years

Sales ($m) Local Payroll


($ 000,000,000)
2.0 1
3.0 3
2.5 4
2.0 2
2.0 1
3.5 7

a) The management of the company wants to establish a mathematical relationship to


help predict sales. Using regression analysis, compute sales when the payroll is $
6,000,000,000.
b) Compute the correlation coefficient and coefficient of determination.

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