Your manager is trying to determine what forecasting method to use. Based upon the fol-lowing historical data, calculate the following forecast and specify what procedure you would utilize.
Month ...... Demand
1 ...... 62
2 ...... 65
3 ...... 67
4 ...... 68
5 ...... 71
6 ...... 73
7 ...... 76
8 ...... 78
9 ...... 78
10 ...... 80
11 ...... 84
12 ...... 85
a. Calculate the simple three- month moving average forecast for periods 4– 12.
b. Calculate the weighted three- month moving average using weights of 0.50, 0.30, and 0.20 for periods 4– 12.
c. Calculate the single exponential smoothing forecast for periods 2– 12 using an initial forecast (F1) of 61 and an α of 0.30.
d. Calculate the exponential smoothing with trend component forecast for periods 2– 12 using an initial trend forecast ( T 1 ) of 1.8, an initial exponential smoothing forecast ( F 1 ) of 60, an α of 0.30, and a δ of 0.30.
e. Calculate the mean absolute deviation (MAD) for the forecasts made by each technique in periods 4– 12. Which forecasting method do you prefer?