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.