Joey is managing a sustainability consulting business. She would like to predict what revenues will be for October 2016. She has monthly data for the past 12 months.
Please complete the following:
• Calculate the forecast for October 2016 (and all earlier months as appropriate) using a 4-period moving average.
• Calculate the forecast for October 2016 (and all earlier months as appropriate) using a 3-period weighted moving average where the most recent weight is 0.5 and 2nd most recent is 0.4.
• Calculate the forecast for October 2016 (and all earlier months as appropriate) using exponential smoothing. Pick the alpha that gives the BEST forecast (with respect to MAD), out to 1 decimal place only, please. Initialize the forecast by having November 2015’s forecast = October 2015’s actual revenues.
• Calculate the forecast for October 2016 (and all earlier months as appropriate) using the simple naïve method. (1 point) • Calculate MAD for each of these 4 forecasts.
• On a separate page, create one Excel chart that shows: Revenues from October 2015 onward AND all 4 forecasts for October 2016 and earlier months as appropriate.
Month-Yr Revenue (in 1,000s)
Oct-15 $80
Nov-15 $85
Dec-15 $95
Jan-16 $90
Feb-16 $85
Mar-16 $90
Apr-16 $70
May-16 $80
Jun-16 $85
Jul-16 $85
Aug-16 $90
Sept. 16 $80