Data collected on the yearly demand for 50-pound bags of fertilizer at Wallace Garden Supply are shown in the following table:
Year Bags (in thousands) Year Bags (in thousands)
1 4 7 7
2 6 8 9
3 4 9 12
4 5 10 14
5 10 11 15
a) develop two-year, three-year, and four-year moving averages to forecast demand in year 12.
b) Forecast demand with a three-year weighted moving average in which demand in the most recent year is given a weight of 2 and demands in the two years are each given a weight of 1.
c) Forecast demand by using exponential smoothing that the forecast for year 1 is 5,0000 bags to begin the procedure.
d) Which of the methods analyzed here would you use. Explain your answer.
Answers for above:
A) MAPE2-MA =22.57%, MAPE3-MA =22.92%, MAPE4-MA =27.07%.
B) MAPE3-WMA = 21.17%.
C) MAPE2-MA =25.50%
3-PERIOD SEEMS TO BE THE BEST, BUT WHY?
See attached file for full problem description.
This posting contains solution to following forecasting problem using Excel modules