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# Forecasting the demand by moving average method

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You sold the following number of flowers during the last two weeks. Calculate a forecast of the demand using a 3 and 5 period moving average. Graph these forecasts and the original data using excel. What does the graph show and which of the above forecasts is best and why.

Day 1 Demand Day Demand
1 200 8 150
2 134 9 182
3 157 10 197
4 165 11 136
5 177 12 163
6 125 13 157
7 146 14 169

#### Solution Preview

Please refer attached file for better clarity of tables and missing graph.
Solution

3-period moving average

Day Demand, D Forecast, F Absolute value
of difference, D-F
1 200
2 134
3 157
4 165 163.67 1.33
5 177 152.00 25.00
6 125 166.33 41.33
7 146 155.67 9.67
8 150 149.33 0.67
9 182 140.33 41.67
10 197 159.33 37.67
11 136 176.33 40.33
12 163 171.67 8.67
13 157 165.33 8.33
14 169 152.00 17.00
15 ...

#### Solution Summary

Solution describes the steps to calculate a forecast of demand using a 3 and 5 period moving average method.

\$2.19

## Demand Forecasting by Moving Average Method

You have the following data for the last 12 months' sales for the PRQ Corporation (in thousands of dollars):

January 500 July 610

February 520 August 620

March 520 September 580

April 510 October 550

May 530 November 510

June 580 December 480

a. Calculate a 3-month centered moving average.
b. Use this moving average to forecast sales for January of next year.
c. If you were asked to forecast January and February sales for next year, would you be confident of your forecast using the preceding moving averages? Why or why not?

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