The Saki motorcycle dealer in Minneapolis-St. Paul area wants to make an accurate forecast of demand for the Saki Super TXII motorcycle during the next month. Because the manufacturer is in Japan, it is difficult to send motorcycles back or reorder if the proper number is not ordered a month ahead. From sales records, the dealer has accumulated the following data for the past year:
Month Motorcycle Sales
a)Compute a 3 month moving average forecast of demand for April through January (of the next year)
b)Compute a 5 month moving average forecast for June through January
c)Compare the two forecasts computed in (a) and (b), using MAD. Which one should the dealer use for January of the next year?
The solution contains a forecasting problem using moving average method.