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    Different Methods for Forecasting Sales

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    Monthly sales for National Mixer, Inc. for a seven-month period were as follows:

    Month (T) - Sales (1000 UNITS)
    Feb - 19
    Mar - 18
    Apr - 15
    May - 20
    Jun - 18
    Jul - 22
    Aug - 20

    Forecast the sales volume for September using each of the following method:
    a) 5-month moving average;
    b) Weighted average, where the weights are - 0.60 (August), 0.30 (July), 0.10 (June)
    c) Exponential smoothing with a smoothing constant equal to 0.20
    d) Linear trend equation, Y = 16.86+0.5*T;

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    Solution Preview

    a)
    5-month moving average;
    Using the 5-month moving average, the forecast for September
    15+20+18+22+20/5 = 19 (in units of thousands)

    b)
    Weighted average, where the weights are - 0.60 (August), 0.30 (July), 0.10 (June)
    Using weighted moving average, for the month of September, the forecast for September = .1*18 + .3*22 + .6*20 =20.4(in units of thousands)

    c)
    Exponential ...

    Solution Summary

    This question gives the sales for 7 months, and asks to forecast sales for the next month. You need to calculate moving average and weighted average, exponential smoothing and look at linear trend equation.

    $2.19

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