Question
Marie Bain is the production manager at a company that manufactures hot water heaters. Marie needs a demand forecast for the next few years
Marie Bain is the production manager at a company that manufactures hot water heaters. Marie needs a demand forecast for the next few years to help decide whether to add new production capacity. The company's sales history (in thousands of units) is shown in the table below. Period Demand 1 12 2 15 3 16 4 16 5 18 6 20 a) Use 2 year moving average to forecast the demand for periods 5 and 6. b) Use three-year weighted moving average with weight 3, 2, 1 (largest weight is for the most recent data) to forecast the demand for periods 5 and 6. c) Use exponential smoothing with smoothing constant of 0.2 to forecast the demand for periods 5 and 6, assuming the forecast for period 4 is 15. d) Use trend-adjusted exponential smoothing to forecast the demand for periods 5 and 6, assuming a=0.2, p=0.4, S3=15, and T3=1. e) What is the most accurate method?
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