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
- 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
- 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
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