Exam 4: Forecasting

Weekly sales of ten-grain bread at the local organic food market are in the table below. Based on this data, forecast week 9 using a five-week moving average. Week Sales 1 415 2 389 3 420 4 382 5 410 6 432 7 405 8 421

Jim's department at a local department store has tracked the sales of a product over the last ten weeks. Forecast demand using exponential smoothing with an alpha of 0.4, and an initial forecast of 28.0 for period 1. Calculate the MAD. What do you recommend? Period Demand 1 24 2 23 3 26 4 36 5 26 6 30 7 32 8 26 9 25 10 28 Answer: Period Demand Forecast Error Absolute 1 24 28.00 2 23 26.40 -3.40 3.40 3 26 25.04 0.96 0.96 4 36 25.42 10.58 10.58 5 26 29.65 -3.65 3.65 6 30 28.19 1.81 1.81 7 32 28.92 3.08 3.08 8 26 30.15 -4.15 4.15 9 25 28.49 -3.49 3.49 10 28 27.09 0.91 0.91 Total 2.64 32.03 Average 0.29 3.56 Bias MAD The tracking signal RSFE/MAD = 2.64/3.56 = .742 is low; therefore, keep using the forecasting method.

When one constant is used to smooth the forecast average and a second constant is used to smooth the trend, the forecasting method is __________.

Explain the role of regression models (time series and otherwise) in forecasting. That is, how is trend projection able to forecast? How is regression used for causal forecasting?

The larger the standard error of the estimate, the more accurate the forecasting model.

Weekly sales of copy paper at Cubicle Suppliers are in the table below. Compute a three-period moving average and a four-period moving average for weeks 5, 6, and 7. Compute MAD for each forecast. Which model is more accurate? Forecast week 8 with the more accurate method. Week Sales (cases) 2 17 2 21 3 27 4 31 5 19 6 17 7 21

Explain, in your own words, the meaning of the coefficient of determination.

Name and discuss three qualitative forecasting methods.

What is focus forecasting?

One use of short-range forecasts is to determine

An approach to exponential smoothing in which the smoothing constant is automatically changed to keep errors to a minimum is called __________.

Linear-regression analysis is a straight-line mathematical model to describe the functional relationships between independent and dependent variables.

If a forecast is consistently greater than (or less than) actual values, the forecast is said to be biased.

In trend projection, a negative regression slope is mathematically impossible.

The larger the number of periods in the simple moving average forecasting method, the greater the method's responsiveness to changes in demand.

A forecasting method has produced the following over the past five months. What is the mean absolute deviation? Actual Forecast Error \mid Error \mid 10 11 -1 1 8 10 -2 2 10 8 2 2 6 6 0 0 9 8 1 1

The last seven weeks of demand at a new car dealer are shown below. Use a three-period weighted-moving average to determine a forecast for the 8ᵗʰ week using weights of 1, 2, and 3. Calculate the MAD for this forecast. What does the MAD indicate? Week Sales 1 25 2 30 3 27 4 31 5 27 6 29 7 30

The smoothing constant is a weighting factor used in __________.

A fundamental distinction between trend projection and linear regression is that

__________ is a time-series forecasting method that fits a trend line to a series of historical data points and then projects the line into the future for forecasts.