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Forecasting

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3-months moving average 1600 1400 1200 1000 800 600 400 200 0 0 2 4 6 Sales 8 3 months moving average 10 12 14 Forecast with α= 0.2 1600 1400 1200 1000 800 600 400 200 0 0 2 4 6 Sales 8 Forecasts: α= 0.2 10 12 14 Trend 100 90 80 70 60 50 40 30 20 10 0 0 2 4 6 x (quarters) 8 10 y (sales) Trend 12 14 16 Moving Average Example The table below represents sales of a company. Calculate a 3 moving average for the data; Months January February March April May June July August September October November December Sales 1020 1180 1410 1120 1360 1270 1160 1200 1310 1420 1390 1400 Solution 3 monthly moving average is computed as follows; April forecast= (January + February + March)/3 = (1020+1180+1410)/3 = 3610/3 = 1203.33 May forecast= ( February + March + April)/3 = (1180+1410+1120)/3 = 3710/3 = 1236.67 Therefore, a 3 months moving average will be as follows; Months Sales 3 months moving average January 1020 February 1180 March 1410 April 1120 1203.333333 May 1360 1236.666667 June 1270 1296.666667 July 1160 1250 August 1200 1263.333333 September 1310 1210 October 1420 1223.333333 November 1390 1310 December 1400 1373.333333 Exponential Smoothing Example using the previous example & smoothing-constant 0.2 generate monthly forecasts. Months January February March April May June July August September October November December Sales Forecasts: α= 0.2 1020 1180 1410 1120 1360 1270 1160 1200 1310 1420 1390 1400 Solution ...
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