Month

Monthly Carpet
Sales (1000s YD)

1
2
3
4
5
6
7
8
9
10

5
10
4
3
8
2
12
11
9
14

Sum
Average

78
7.8

Montly
Construction
Permits
21
35
10
12
16
9
41
15
18
26
203
20.3

XY

Slope
0.2680 Correlation
Intercept
2.360
Linear Regression:y = 2.360 + 0.2680x
Use Excel Function
Slope
Intercept

X^2

105
350
40
36
128
18
492
165
162
364
1860

441
1225
100
144
256
81
1681
225
324
676
5153

Linear Line
7.99
11.74
5.04
5.58
6.65
4.77
13.35
6.38
7.18
9.33

0.70

0.267997287
2.359655072

Monthly Carpet Sales (1000s YD)

15
10
5
0
0

10

20
30
Monthly Construction Permits

40

50

Example 2: Simple Moving Average - Pizza Sales

Recent demand
Forecasted Demand (pizza)
(pizza)
MA (n=1) MA (n=2) MA (n=3) MA (n=4) MA (n=5)
1
50
2
65
50
3
52
65
57.5
4
56
52
58.5
55.7
5
55
56
54
57.7
55.75
6
60
55
55.5
54.3
57
56.3
Forecast for Week 7
60
57.5
57
55.8
57.6
Week

Week

Absolute Deviation
MA (n=1) MA (n=2) MA (n=3) MA (n=4) MA (n=5)

1
2
3
4
5
6
Mean Absolute Deviation (MAD)

15
13
4
1
5
7.6

5.5
2.5
1
4.5
3.4

0.33
2.67
5.67
2.9

11/3/2014

0.75
3.00
1.9

3.67
3.7

Exponential Smoothing and Adjusted Exponential Smoothing

Period
1
2
3
4
5
6
7
8
9

Month
May
June
July
Aug
Sep
Oct
Nov
Dec
Jan

Actual
Demand
100
80
110
115
105
110
125
120

alpha
Exponential
Smoothing Forecast
(Ft+1)
105
104
99
101
104
104
105
109
111

0.2

Sales (units)

Exponential Smoothing Forecast

130
120
110
100
90
80
70
60

Actual Demand

Exponential Smoothing
Forecast (Ft+1)

Month

Linear Trend Line

X
Period

Sum
Average
Slope (b)
Intercept (a)

1
2
3
4
5
6
7
8
36
4.5

Month
May
June
July
Aug
Sep
Oct
Nov
Dec

Y
Demand
(Dt)
100
80
110
115
105
110
125
120
865
108.125

4.22619
89.10714

XY
100
160
330
460
525
660
875
960
4070

X**2
1
4
9
16
25
36
49
64
204

Linear trend line

93.3
97.6
101.8
106.0
110.2
114.5
118.7
122.9

Linear Trend Line

130.0
4.22619
89.10714

Correlation

0.746294

110.0

Sales (units)

Slope
Intercept

90.0

Linear trend line

70.0

Demand

50.0
0

5
Month

10

Actual Demand (D)

140

120

Actual Demand

100

80
Actual Demand (D)

60

40

20

0
8
Period

Table 2: Accuracy Measurement

Forcast Error E = D-F

Periods

Month

Moving
Average

Squared Error E^2

WMA

Exponen
tial
Smoothi
ng

Linear
Trend
Line

Moving
Average

Absolute Forcast Error |E|

WMA

Exponen
tial
Smoothi
ng

Linear
Trend
Line

Moving
Average

WMA

Exponen
tial
Smoothi
ng

May

June

July

August

18.33

16.00

13.64

8.99

336.11

256.00

186.05

80.79

18.33

16.00

13.64

September

3.33

-1.50

0.91

-5.24

11.11

2.25

0.83

27.44

3.33

1.50

0.91

October

0.00

1.00

5.73

-4.46

0.00

1.00

32.83

19.93

0.00

1.00

5.73

November

15.00

15.50

19.58

6.31

225.00

240.25

383.52

39.81

15.00

15.50

19.58

December

6.67

3.50

10.67

-2.92

44.44

12.25

113.78

8.51

6.67

3.50

10.67

43.33

34.50

50.53 Not Applied

123.33

102.35

143.40

35.29
43.33

37.50

50.53

Cumulative Sum of Forecast Error (CFE)

Mean Square Error (MSE)
Mean Absolute Deviation (MAD)
Mean Absolute Percent Deviation

Error |E|

|E| / D

WMA

Exponen
tial
Smoothi
ng

Linear
Trend
Line

Linear
Trend
Line

Moving
Average

8.99

0.16

0.14

0.12

0.08

5.24

0.03

0.01

0.01

0.05

4.46

0.00

0.01

0.05

0.04

6.31

0.12

0.12

0.16

0.05

2.92

0.06

0.03

0.09

0.02

7.33

6.31

8.50

4.87

27.92