Storrs Cycles has just started selling the new Cyclone mountain bike, with monthly sales as shown in the table. First, coowner Bob Day wants to forecast by exponential smoothing by initially setting February’s forecast equal to January’s sales with a = .1.

Co-owner Sherry Snyder wants to use a three-period moving average.

SALES BOB SHERRY BOB’S ERROR SHERRY’S ERROR JANUARY 400 —

FEBRUARY 380 400 MARCH 410 APRIL 375 MAY

a) Is there a strong linear trend in sales over time?

b) Fill in the table with what Bob and Sherry each forecast for May and the earlier months, as relevant.

c) Assume that May’s actual sales figure turns out to be 405.
Complete the table’s columns and then calculate the mean absolute deviation for both Bob’s and Sherry’s methods.

d) Based on these calculations, which method seems more accurate?

Registration numbers for an accounting seminar over the past 10 weeks are shown below:
WEEK 1 2 3 4 5 6 7 8 9 10 REGISTRATIONS 22 21 25 27 35 29 33 37 41 37

a) Starting with week 2 and ending with week 11, forecast registrations using the naive forecasting method.

b) Starting with week 3 and ending with week 11, forecast registration using a 2-week moving average.

c) Starting with week 5 and ending with week 11, forecast registrations using a 4-week moving average.

d) Plot the original data and the three forecasts on the same graph. Which forecast smoothes the data the most? Which forecast responds to change the best?