1. Provide a moving average to this data. Consider a 2-month, a 3-month, and a 5-month moving average. Provide a line chart of all 3 potential moving averages relative to the actual results provided above. Compute the average deviation of your prediction. Which moving average would you recommend? Please copy and paste all of your work into a Word document.

Month	Actual Sales	M-2	M-3	M-5
1	200
2	214
3	205	207
4	215	209.5	206.33
5	235	210	211.33
6	215	225	218.33	213.8
7	235	225	221.67	216.8
8	212	225	228.33	221
9	220	223.5	220.67	222.4
10	205	216	222.33	223.4

I suggest using the 3-month moving average since it has the lowest average deviation. The 2-month moving average showed an average deviation of 7.75. Meanwhile, the 5-month moving average had an average deviation of 10.6, making the 2-month moving average with an average deviation of 6.56 the more preferable option for predicting future sales.

Homework 3 Question 2:

2. Consider a weighting for the moving average. Provide an Excel file with the potential weights in cells A1, B1 for the 2-month moving average; A2, B2, C2 for the 3-month moving average; and A3, B3, C3, D3, E3 for the 5-month moving average. What weightings would you recommend? Why?

0.1	0.2
0.1	0.2	0.3
0.1	0.2	0.3	0.4	0.5

I strongly recommend that the weightings be used on a monthly basis in order to collect forecasting information. In obtaining this information, I would assign the highest weight to the most recent months and a lower weight to previous months, ensuring a more accurate forecast of potential sales for the coming months.

Homework 3 Question 3:

3. For the same data above, provide an exponential smoothing result. Please provide results for alpha = 0.1 incremented by 0.1 up to alpha = 0.9. Please provide the average deviation for each alpha. Comment on the preferred alpha moving forward. What is the forecast for Month 11 for each potential alpha?

Homework 3 Question 4:

4. What would you recommend as the forecasting tool to use going forward, given results from the previous problems 1-3?