HiTek Computer Services

HiTek Computer Services repairs and services personal computers at its store and it make local service calls. It primarily uses part-time State University students as technicians. The company has had steady growth since it started. It purchases generic computer parts in volume at a discount from a variety of sources whenever they see a good deal. Thus, they need a good forecast of demand for repairs so that they will know how many computer component parts to purchase and stock, and how many technicians to hire.

The company has accumulated actual demand data shown in the table for repair and service calls for the past year.

Part 1: Simple Exponential Smoothing ( = 0.4)

1. Estimate level component (Lt) for periods 1-4.

2. Forecast demand (Ft) for periods 1-4.

3. Forecast demand (Ft) for periods 5-8.

4. Calculate forecast errors: MSE, MAD, and TS.

Part 2: Holts model ( = 0.4, = 0.2)

Obtain the initial level L0 and trend T0 using the regression approach discussed in text (no need to deseasonalized). Treat time period as X and demand as Y

1. Period 1: Estimate level component (L1) and trend component (T1).

2. Period 2: Estimate level component (L2) and trend component (T2).

3. Period 3: Estimate level component (L3) and trend component (T3).

4. Period 4: Estimate level component (L4) and trend component (T4).

5. Forecast demand (Ft) for periods 1-4.

6. Forecast demand (Ft) for periods 5-8.

7. Calculate forecast errors: MSE, MAD, and TS.

B D E G Period t Year, Quarter Demand D Level LE Forecast Ft 3 4 0 37.00 5 1 37 6 2 40 7 3 41 37 00 4 5 Y1, Q1 Y1, Q2 Y1, Q3 Y1, Q4 Y2, Q1 Y2, Q2 Y2, Q3 Y2, Q4 9 10 6 11 7 12 8 B D E G Period t Year, Quarter Demand D Level LE Forecast Ft 3 4 0 37.00 5 1 37 6 2 40 7 3 41 37 00 4 5 Y1, Q1 Y1, Q2 Y1, Q3 Y1, Q4 Y2, Q1 Y2, Q2 Y2, Q3 Y2, Q4 9 10 6 11 7 12 8