QUESTION 1

Weekly closing prices (in RM) for Telstra for Sept 2015 - October 2015 is as follows:

Week Share Price

1 3.47

2 3.58

3 3.41

4 3.39

5 3.25

6 3.40

7 3.35

8 3.51

9 3.41

10 3.41

Solve:

1. Use a 3 week moving average (SMA) to forecast the price for week 11.

2. Use a 3 week weighted moving average (WMA) to forecast the price for week 11. Use the weight of 3 for the latest period, 2 for the second latest period and 1 for the third latest period.

3. Use the exponential moving average (EMA) forecast to forecast price for week 11. Use = 0.2 as the smoothing constant. Initial week 1 forecast was 3.47.

4. Which forecast gave the best result? Use MAD to find out.

QUESTION 2

Sales of Cool Man air conditioners have grown steadily during the past five years:

YEAR SALES

1 450

2 495

3 518

4 563

5 584

6 ?

*The sales manager predicted that year 1 sales would be 450 air conditioners.

Solve:

1. Using = 0.30, develop forecast for year 2 to 6

2. Use = 0.60 and = 0.90, develop forecast for year 2 to 6

3. Referring to item 1 and item 2, which smoothing constant gives a more accurate forecast? Use MSE and MAPE for your answer.