Forecasting Error

Question

Forecasting Exercise   

You are the   supply chain manager for an electronics-manufacturing company. In this assignment, you will use the following data to obtain forecasts for you company through various forecasting techniques.   Quarter Forecast Actual Demand

   4Q 2008 200 220   1Q 2009 220 215  

 2Q 2009 215 210   3Q 2009 210 220

  4Q 2009 220 225   1Q 2010 225 240

  2Q 2010 240 255   3Q 2010  260

  4Q 2010  270   1Q 2011    

 • (a) Using   the three quarters moving average, find out the forecasts for 3Q 2010, 4Q   2010, and 1Q 2011.  

 • (b)   Compute the forecasts for 3Q 2010, 4Q 2010, and 1Q 2011 using exponential   smoothing with a smoothing factor of 0.6.   

• (c) Compute the forecasts for all quarters of   2010 using the three quarter weighted moving average, with the most recent   data weighted at 0.5, the second-most recent data weighted at 0.35, and the   third-most recent data weighted at 0.15.

  • (d) Using   the data provided in the above table, explain what forecasting techniques are   being used for 2008 and the first two quarters of 2009.  

 • (e)   Computed the forecasting error using the exponential smoothing technique.  

 • (f)   Computed the forecasting error using the weighted smoothing average method.

  • (g) On the   basis of your calculations, explain which technique provides the most   accurate forecast for your company. Explain your answer with critical   reasoning.