The monthly sales for Yazici Batteries, Inc., were as follows — Plot data — Forecast January using each following — month moving average

ii) A 3- month moving average.

iii) A 6- month weighted average using .1, .1, .1, .2, .2, and .3, with the heaviest weights applied to the most recent months.

iv) Exponential smoothing using an a 5 .3 and a September forecast of 18.

v) A trend projection.

c) With the data given, which method would allow you to fore-cast next March’s sales?

SOLUTION:

(a)

(b)  [i] Naïve The coming January = December = 23

[ii] 3-month moving   (20 + 21 + 23)/3 = 21.33

[iii] 6-month weighted [(0.1 × 17) + (.1 × 18)

+ (0.1 × 20) + (0.2 × 20)

+ (0.2 × 21) + (0.3 × 23)]/1.0

= 20.6

[iv] Exponential smoothing with alpha = 0.3

[v] Trend 

Forecast = 15.73 + .38(13) = 20.67, where next January is the 13th month.

(c) Only trend provides an equation that can extend beyond one month