BUAD 831

Dr. Hyde
Assignment 1
Forecasting
1. (30 points)

Using the data below,

a) Use a 3-month moving average model to forecast sales for periods 6-11.
b) Use a 5-month moving average model to forecast sales for periods 6-11.
c) Use an exponential smoothing model with =.2 to forecast sales for periods 6-11. Assume a
forecast of 65,000 for period 5.
d) Use an exponential smoothing model with =.6 to forecast sales for periods 6-11. Assume a
forecast of 65,000 for period 5.
e) Compare the forecasts in (a)-(d) for periods 6 - 10. Which is best? Why? Support your answer
with appropriate statistics.
f) Starting with your solution to part (d), complete a double smoothing model for periods 6 -10 for
sales. Again, assume a forecast of 65,000 for period 5.
Note: Do parts a-d, and f using Excel.
Period
1
2
3
4
5
6
7
8
9
10
2.

Sales
$35,725
$47,180
$54,965
$63,220
$66,315
$57,730
$62,700
$60,025
$74,590
$83,900

See the posted Excel file with UD tuition data from 2000 2014. You have a daughter who is
currently in 7th grade. She hopes to attend UD right after she finishes high school. Given the data
in the attached file, use a linear model to forecast her TOTAL associated 4-year tuition and
mandatory fees (rounded to the nearest $1,000). Use the data set that reflects your residency status.
If you use the trendline option to generate the linear model, Id suggest using t as the independent
variable. Otherwise, Excel will generate your trend line equation using scientific notation and
youll have to change the formatting to get the exact number you need. 12 pts
Note: The data does NOT include study abroad tuition and program fees. When you finish the problem,
pick your jaw up off the floor and proceed to Problem #3.

3.

The table below shows historical data regarding actual and projected inventory levels.
Period
Actual

1 2
50 70

3
60

Forecaste

40 65

70

4
20
80

5
10
70

6
65

7
60

8
85

75

50

80

8 pts

d
a)
b)
c)

For periods 1 8, on average, did the forecast underestimate or overestimate? And, by how
many units, on average, did the forecast underestimate /overestimate per period? You must
justify your answer with calculations.
For periods 1 8, the forecast deviated from actual by an average of _______ units per period.
You must justify your answer with calculations.
In this particular case, which performance measure would be best to evaluate various
forecasting methods for monthly ending inventory BIAS, MAD or MSE? Justify your
answer.

EXTRA CREDIT (4 pts)

My policy is to provide no input/help on extra credit questions. Also, its all or nothing full credit or
no credit.
You just took over as regional manager for one of your companys up-and-coming products. The
product went on the market December 2013; its now January 2015. The product has been experiencing
slow growth (as expected). Exponential smoothing with trend has been used to forecast monthly
demand for the product during these past 13 months. Youve looked at the forecasted vs actual for the
past few months and the forecast seems to be performing adequately.
One of your employees just told you that she has discovered a typo in the initial December forecast. It
was entered as 50,000 but should have been 5,000. The forecast over the past 12 months has never been
corrected.
What are you going to do about next months forecast? (You must justify your course of action.)