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Moving Average Forecast and Cumulative Error

1. The Fastgro Fertilizer Company distributes fertilizer to various lawn and garden shops. The company must base its quarterly production schedule on a forecast of how many tons of fertilizer will be demanded from it. The company has gathered the following data for the past 3 years from its sales records:

Year Quarter Demand for Fertilizer (tons)

1 1 105
2 150
3 93
4 121

2 5 140
6 170
7 105
8 150

3 9 150
10 170
11 110
12 130

A. Compute a three quarter moving average forecast for quarter 4 through 13 and compute the forecast error for each quarter.

B. Compute a five quarter moving average forecast for quarters 6 through 13 and compute the forecast error for each quarter.

C. Compute a weighted three quarter moving average forecast, using weights (weighing factors) of .50, .33, and .17 for the most recent, next recent, and most distant data, respectively, and compute the forecast error for each quarter.

D. Compare the forecasts developed in (a), (b), and (c), using cumulative error. Which forecast appears to be most accurate? Do any of them exhibit any bias?

Solution Summary

This solution is comprised of detailed step-by-step calculations and explanation of various Forecast Techniques like Moving Average Forecast and Weighted Moving Average Forecast and Forecast Accuracy Measures like Forecast Error and Cumulative Error in EXCEL. Comparison of these Forecast Techniques based on these Forecast Accuracy measures has also been shown.

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