=+1 Comparing a Two-Period Moving Average and an Exponential Smoothing Model 2

3 4

A D B C E F G H I 5

6 7

8 9

12 11 10 13 15 14 17 19 18 16 Period 1

4 3

2 5

7 6

9 11 10 8

21 20 23 22 24 65.00 61.75 60.35 63.50 64.82 69.08 66.98 62.35 61.57 59.90 65.25 63.36

–5.00 10.26 4.65

–10.50 7.18

–19.08 7.02 9.65

–5.57

–8.90

–12.25 55.36 54.95 57.23

–1.36 0.05

–1.380

–6.23

–3.36 5.00 10.26 4.65 10.50 7.18 19.08 7.02 9.65 5.57 8.90 12.25 1.36 0.05 7.350 6.23 3.36 Demand Two-period moving average model Weight on Period t-2:

Weight on Period t-1:

Forecast Forecast 60.8 55.45 66.55 73.3 72 56.5 59.65 67.8 58.4 Exponential smoothing model Initial forecast:

Alpha (a): 0.3 65 Forecast Error Forecast Error 11.2 9.55 2.45

–23.3 2

15.5

–3.65

–14.8 1.6 Absolute Deviation Absolute Deviation 12 14 15 13 54.95 51 52.75

–3.95 3

–1.75 52.95 MFE =

2.05

–0.008 MAD =

MFE =

MAD =

11.2 9.55 2.45 23.3 2

15.5 3.65 14.8 1.6 3.95 3

1.75 2.05 7.292 60 72 65 53 72 50 74 72 56 53 60 51 54 51 55 0.65 0.35 Problems for Section 9.6: Causal Forecasting Models