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Tutorial Forecasting

The document provides examples of different forecasting techniques including moving averages, exponential smoothing, and regression analysis. It includes sample time-series data and calculations for sales, demand, returns, and profits to illustrate how to apply these forecasting methods. Managers are encouraged to use these quantitative forecasting approaches to help predict future trends and inform inventory, production, and financial planning.

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Black Sky
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Download as PDF, TXT or read online on Scribd
235 views

Tutorial Forecasting

The document provides examples of different forecasting techniques including moving averages, exponential smoothing, and regression analysis. It includes sample time-series data and calculations for sales, demand, returns, and profits to illustrate how to apply these forecasting methods. Managers are encouraged to use these quantitative forecasting approaches to help predict future trends and inform inventory, production, and financial planning.

Uploaded by

Black Sky
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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CHAPTER 4: FORECASTING

PROBLEMS

1. Weekly sales of ten-grain bread at the local organic food market are in the table below. Based on
this data, forecast week 9 using a five-week moving average.

Week Sales
1 415
2 389
3 420
4 382
5 410
6 432
7 405
8 421
(410.0)

2. Given the following data, calculate the three-year moving averages for years 4 through 10.

Year Demand
1 74
2 90
3 59
4 91
5 140
6 98
7 110
8 123
9 99

3. What is the forecast for May based on a weighted moving average applied to the following past
demand data and using the weights: 4, 3, 2 (largest weight is for most recent data)?

Nov. Dec. Jan. Feb. Mar. April


37 36 40 42 47 43
(44.1)

4. A management analyst is using exponential smoothing to predict merchandise returns at an upscale


branch of a department store chain. Given an actual number of returns of 154 items in the most
recent period completed, a forecast of 172 items for that period, and a smoothing constant of 0.3,
what is the forecast for the next period? How would the forecast be changed if the smoothing
constant were 0.6? Explain the difference in terms of alpha and responsiveness.

5. Use exponential smoothing with α = 0.2 to calculate smoothed averages and a forecast for period
7 from the data below. Assume the forecast for the initial period is 7.
Period Demand
1 10
2 8
3 7
4 10
5 12
6 9

Period Demand Forecast


1 10 7.0
2 8 7.6
3 7 7.7
4 10 7.5
5 12 8.0
6 9 8.8
7 8.4

6. Favors Distribution Company purchases small imported trinkets in bulk, packages them, and sells
them to retail stores. They are conducting an inventory control study of all their items. The
following data are for one such item, which is not seasonal.

a. Use trend projection to estimate the relationship between time and sales (state the equation).
b. Calculate forecasts for the first four months of the next year.

1 2 3 4 5 6 7 8 9 10 11 12
Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sales 51 55 54 57 50 68 66 59 67 69 75 73

7. An innovative restaurateur owns and operates a dozen "Ultimate Low-Carb" restaurants in northern
Arkansas. His signature item is a cheese-encrusted beef medallion wrapped in lettuce. Sales (X, in
millions of dollars) is related to Profits (Y, in hundreds of thousands of dollars) by the regression
equation Y = 8.21 + 0.76 X. What is your forecast of profit for a store with sales of $40 million?
$50 million?
($3,861,000 , $4,621,000 )

8. Arnold Tofu owns and operates a chain of 12 vegetable protein "hamburger" restaurants in northern
Louisiana. Sales figures and profits for the stores are in the table below. Sales are given in millions
of dollars; profits are in hundreds of thousands of dollars. Calculate a regression line for the data.
What is your forecast of profit for a store with sales of $24 million? $30 million?

Store Profits
Sales
1 14 6
2 11 3
3 15 5
4 16 5
5 24 15
6 28 18
7 22 17
8 21 12
9 26 15
10 43 20
11 34 14
12 9 5

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