# Forecasting: Moving Averages, Exponential Smoothing

A. Use 5 period moving average (MA n=5) to compute the forecasts of sales for months 6 to 20 and a 7 period moving average (MA n=7) to compute forecasts for months 8 to 20.

b. Use an exponential smoothing approach with a smoothing constant alpha =0.2 to forecast sales for month 2 to 20. Change alpha to 0.1. Does this make the forecast better or worse? (calculate the MSD and compare their MSD Explain. Assume that the forecast for month 2 is 22 (same as first month's sales)

c. Find alpha that minimizes the MSD. (using solver)

Data:

Month Sales

1 22

2 21

3 24

4 30

5 25

6 25

7 33

8 40

9 36

10 39

11 50

12 55

13 44

14 48

15 55

16 47

17 61

18 58

19 55

20 60

Please see the attached file for full problem description including data chart.

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#### Solution Summary

Forecasts using moving average, exponential smoothing and finds alpha that minimizes the MSD.