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1. Different forecasting techniques were used to forecast demand for an item. The actual demand and the two sets of forecasts are as follows:
Actual Demand Forecast Using Method 1 Forecast Using Method 2
210 250 200
300 325 250
330 400 325
340 350 300
350 375 325
425 450 400
Compute the MAD for each set of forecasts. Which forecast appears to be most accurate?

2. Quarterly sales in units for the last two years are as follows:
Quarter Year 1 Year 2
I 27 43
II 48 64
III 73 109
IV 44 56

A straight line was fitted to the sales data. The equation of the fitted line is Y = 35 + 5 × t. The first quarter in the data is labeled t = 1.
a. Calculate seasonal indexes for this product using the fitted line approach.
b. Using the fitted line and seasonal indexes you have just calculated, forecast sales in each quarter of year 3.

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This solution is comprised of detailed step-by-step calculation of the given problem in EXCEL and provides students with a clear perspective of the underlying concepts.

Solution provided by:
Anwesha Ghosh, MSc
Education
  • MSc, Osmania University
  • MSc, Indian Institute of Technology - Roorkee (I.I.T.-ROORKEE)
  • BSc, Banaras Hindu University
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