Operations Management- Moving Averages and forecasting

Discussion 2

Answer the following questions and discuss with a peer:

Auto sales at Carmen’s Chevrolet are shown below. Develop a 3-week moving average to forecast the sales in Week 7.

Weekly Auto Sales

Week

Auto Sales

1

8

2

1. 10

3

9

4

11

5

10

6

15

7

–

Carmen’s decides to forecast auto sales by weighting the four weeks as follows.  Develop a 4-week weighted moving average to forecast the sales in Week 7, based on the data in problem 1. 

Auto Sales Forecasting

Weights Applied

Period

4

Last week

3

Two weeks ago

2

Three weeks ago

1

Four weeks ago

10

Total

Exercise 2

Complete the following Forecasting problems:

Problem 1

Exponential smoothing is used to forecast automobile battery sales. Two value of  ? are examined, ? = 0.8 and  ? = 0.5 Evaluate the accuracy of each smoothing constant. Which is preferable? (Assume the forecast for January was 22 batteries.) Actual sales are given below:

Forecasting Table

Month

Actual Battery Sales

Forecast

January

20

22

February

21

March

15

April

14

May

13

June

16

Problem 2

1. Coffee Palace’s manager, Joe Felan, suspect that demand for mocha latte coffees depends on the price being charged. Based on historical observations, Joe has gathered the following data, which shows the numbers of these coffees sold over six different price values:

Price    Number Sold
$2.70    760
$3.50    510
$2.00    980
$4.20    250
$3.10    320
$4.05    480

Using these data, how many mocha latte coffees would be forecast to be sold according to simple linear regression if the price per cup were $2.80?

Instructions / Notes