The problem states that the manager of the Carpet City outlet needs to make an accurate forecast of the demand for Soft Shag carpet (it biggest seller). If the manager does not order enough carpet from the carpet mill, customers will buy their carpet from one of Carpet City many competitors. The manager has collected the following demand data for the past eight month
Month Demand for Soft Shag Carpet 1,000 yd
Compute a 3 month moving average forecast for month 4 through 9
Compute a weighed 3 month moving average forecast for months 4 through 9. Assign weights of .53, .33,and .12 to the month in sequence, starting with the most recent month.
Compare the two forecast by using MAD, which forecast appears to be more accurate.
Please refer to the attachment 'Solution.xlsx' for the working and ...
A 3 Month Moving Average Forecast and another 3 Month Weighted Moving Average Forecast, using different smoothing/weighing factors, has been performed in Excel.
Forecast Error (MAD) has been calculated and the two forecasts has been compared using these MAD values.