Your local pharmacist is attempting to forecast the demand for a very expensive heart medication. She places a large order at the beginning of each month, for which she receives an added discount for quantity purchases. The pharmacist is attempting to maintain an adequate supply of the medication, while not overstocking because she can better invest the inventory dollars elsewhere. Demand for the most recent year is shown:
a. Calculate a 3-period moving average forecast for April to January and the bias and MAD.
b. Calculate a 3-period weighted moving average forecast for April to January. (wts =.2, .3, and .5, respectively) and the bias and MAD
c. Calculate a 3-period weighted moving average forecast for April to January (wts = 1, 3, and 6, respectively) and the bias and MAD
d. Based on the bias and MAD, which forecasting technique is best for this situation? Why?
Month Bottles of 100 Sold Month Bottles of 100 Sold
January 80 July 89
February 95 August 82
March 87 September 87
April 82 October 72
May 97 November 94
June 94 December 89