Ms. Winnie Lin's company sells computers. Monthly sales for a six-month period are as follows:
Jan 18,000
Feb 22,000
Mar 16,000
Apr 18,000
May 20,000
Jun 24,000
- Plot the monthly data on a sheet of graph paper.
- Compute the sales forecast for July using the following approaches: 1) a three-month moving average; 2) a weighted three month moving average using .50 for June, .30 for May, and .20 for April; 3) a liner trend equation; 4) exponential smoothing with a (smoothing constant) equal to .40, assuming a February forecast of 18,000.
- Which method do you think is the least appropriate? Why?
- Calculate the MAD for each of the four techniques in part b. Which is the best? Why?