You are on page 1of 23

Exhibit 18.

4 - Simple Moving Average

Week
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

Demand
800
1,400
1,000
1,500
1,500
1,300
1,800
1,700
1,300
1,700
1,700
1,500
2,300
2,300
2,000
1,700
1,800
2,200
1,900
2,400
2,400
2,600
2,000
2,500
2,600
2,200
2,200
2,500
2,400
2,100

Simple
Moving Averages
3 Week
9 Week

Enter the observed demand in the blue


column.

Ac tual Demand

3-wk and 9-wk Simple Moving Averages


1,067
1,300
1,333
1,433
1,533
1,600
1,600
1,567
1,567
1,633
1,833
2,033
2,200
2,000
1,833
1,900
1,967
2,167
2,233
2,467
2,333
2,367
2,367
2,433
2,333
2,300
2,367

3-Wk Moving Average


9-Wk Moving Average

3,000

2,500

1,367
1,467
1,500
1,556
1,644
1,733
1,811
1,800
1,811
1,911
1,933
2,011
2,111
2,144
2,111
2,167
2,267
2,311
2,311
2,378
2,378

2,000

Demand
1,500

1,000

500

0
0

12

16

Week

20

24

28

Ac tual Demand

3-wk and 9-wk Simple Moving Averages

3-Wk Moving Average


9-Wk Moving Average

3,000

2,500

2,000

Demand
1,500

1,000

500

0
0

12

16

Week

20

24

28

32

Examples 18.6 & 18.7 - Least Squares Regression Analysis


(1)

(2)

(3)

(4)

(5)

(6)

t*y

t2

y2

801.3
1,160.9
1,520.5
1,880.1
2,239.7
2,599.4
2,959.0
3,318.6
3,678.2
4,037.8
4,397.4
4,757.1

1
2
3
4
5
6
7
8
9
10
11
12

600
1,550
1,500
1,500
2,400
3,100
2,600
2,900
3,800
4,500
4,000
4,900

600
3,100
4,500
6,000
12,000
18,600
18,200
23,200
34,200
45,000
44,000
58,800

1
4
9
16
25
36
49
64
81
100
121
144

360,000
2,402,500
2,250,000
2,250,000
5,760,000
9,610,000
6,760,000
8,410,000
14,440,000
20,250,000
16,000,000
24,010,000

78

33,350

268,200

650

112,502,500

6.50 = t-bar
2779.17 = Y-bar

359.62
441.67

Enter the period


observed values
blue cells in colu
and C.

=b
=a

Regression Equation is Y = 441.67 + 359.6*t

Exhibit 3.7 Least Squares Regression Line


6,000
5,000
4,000
Sales
3,000
2,000
1,000
0
0

8
Quarters

10

12

14

Enter the period and the


observed values in the
blue cells in columns B
and C.

n Line

8
Quarters

10

12

14

Exhibit 18.8 - Excel Regression Tool


Quarter
1
2
3
4
5
6
7
8
9
10
11
12

Sales
600
1,550
1,500
1,500
2,400
3,100
2,600
2,900
3,800
4,500
4,000
4,900

SUMMARY OUTPUT
Regression Statistics
Multiple R
0.966016
R Square
0.933186
Adjusted R Square
0.926505
Standard Error
363.8778
Observations
12
ANOVA
df
Regression
Residual
Total

Intercept
X Variable 1

SS
MS
F
Significance F
1 18493221 18493221 139.6695 3.37202E-007
10 1324071 132407.1
11 19817292

Coefficients
Standard Error t Stat
P-value
Lower 95% Upper 95%
Lower 95.0%
441.6667 223.9513 1.972155 0.076869 -57.328018732 940.6614 -57.32802
359.6154 30.42899 11.81818 3.37E-007 291.81535792 427.4154 291.8154

Upper 95.0%
940.6614
427.4154

Exhibit 18.9 - Additive and Multiplicative Seasonal Variation

0.95
0.9
0.8
0.6
0.8
0.9
1.1
1.2
1.4
1.2
1.1
1.05

1
2
3
4
5
6
7
8
9
10
11
12

Month Trendline
1
1000
2
1050
3
1100
4
1150
5
1200
6
1250
7
1300
8
1350
9
1400
10
1450
11
1500
12
1550
13
1600
14
1650
15
1700
16
1750
17
1800
18
1850
19
1900
20
1950
21
2000
22
2050
23
2100
24
2150
25
2200
26
2250
27
2300
28
2350
29
2400
30
2450
31
2500
32
2550
33
2600
34
2650
35
2700
36
2750
37
2800
38
2850
39
2900
40
2950
41
3000
42
3050
43
3100
44
3150
45
3200
46
3250
47
3300
48
3350

Additive
Index
-70
-140
-280
-420
-280
-140
140
280
420
280
140
70
Additive
Index
-70
-140
-280
-420
-280
-140
140
280
420
280
140
70
-70
-140
-280
-420
-280
-140
140
280
420
280
140
70
-70
-140
-280
-420
-280
-140
140
280
420
280
140
70
-70
-140
-280
-420
-280
-140
140
280
420
280
140
70

1.4
70

Additive
Demand
930
910
820
730
920
1110
1440
1630
1820
1730
1640
1620
1530
1510
1420
1330
1520
1710
2040
2230
2420
2330
2240
2220
2130
2110
2020
1930
2120
2310
2640
2830
3020
2930
2840
2820
2730
2710
2620
2530
2720
2910
3240
3430
3620
3530
3440
3420

Multiplicative
Index
0.93
0.86
0.72
0.44
0.72
0.86
1.14
1.28
1.56
1.28
1.14
1.07
Multiplicative Multiplicative
Index
Demand
0.93
930
0.86
903
0.72
792
0.44
506
0.72
864
0.86
1075
1.14
1482
1.28
1728
1.56
2184
1.28
1856
1.14
1710
1.07
1658.5
0.93
1488
0.86
1419
0.72
1224
0.44
770
0.72
1296
0.86
1591
1.14
2166
1.28
2496
1.56
3120
1.28
2624
1.14
2394
1.07
2300.5
0.93
2046
0.86
1935
0.72
1656
0.44
1034
0.72
1728
0.86
2107
1.14
2850
1.28
3264
1.56
4056
1.28
3392
1.14
3078
1.07
2942.5
0.93
2604
0.86
2451
0.72
2088
0.44
1298
0.72
2160
0.86
2623
1.14
3534
1.28
4032
1.56
4992
1.28
4160
1.14
3762
1.07
3584.5

The index can be changed by entering a new value in the blue cell or using
the arrow buttons beneat the box to change the value.

Trend Line

Time Series Plot - Additive vs. Multiplicative


Seasonalized Demands

Additive Seasonal
Multiplicative Seasonal
Demand

6000
5000
4000
Demand
3000
2000
1000
0
0

10

20

30
Month

40

50

60

Exhibit 18.10 - Computing a Seasonal Factor from Actual Data and Trend Line

Actual
Amount
1
2
3
4
5
6
7
8

2011 I
II
III
IV
2012 I
II
III
IV

Seasonal
Factor (Ave. of
Same Qtrs in
Both Years)

From Trend
Ratio of
Equation
Actual/Trend
FITt = 170 + 55t

300
200
220
530
520
420
400
700

225
280
335
390
445
500
555
610

1.33
0.71
0.66
1.36
1.17
0.84
0.72
1.15

I
II
III
IV

1.25
0.78
0.69
1.25

800
700
600
500
400
300
200
100
0
I

II

III

IV

Quarter, By Ye ar

II

III

IV

Exhibit 18.11 - Deseasonalized Demand

(1)

(2)

Period (t)
1
2
3
4
5
6
7
8
9
10
11
12
Totals

Qtr
I
II
III
IV
I
II
III
IV
I
II
III
IV

78

(3)

(4)

(5)

(6)

(7)

Actual
Amount

Average of the
Same Qtr of
Each Year

Seasonal
Factor

Deseas. Demand
(yd)

t2

0.82
1.10
0.97
1.12
0.82
1.10
0.97
1.12
0.82
1.10
0.97
1.12

Col. (3) / Col.(5)


735.7
1,412.4
1,544.0
1,344.8
2,942.6
2,824.7
2,676.2
2,599.9
4,659.2
4,100.4
4,117.3
4,392.9

(Col. 1)2
1
4
9
16
25
36
49
64
81
100
121
144

12.00

33,350.0

(y)
600
1,550
1,500
1,500
2,400
3,100
2,600
2,900
3,800
4,500
4,000
4,900

2,266.7
3,050.0
2,700.0
3,100.0

33,350

650

Exhibit 18.12 - Straight Line Graph of Deseasonalized Equation


Original Data
Linear (Original Data)
Deseasonalized Data

6,000
5,000
f(x) = 359.6153846154x + 441.6666666667
4,000
Demand
3,000
2,000
1,000
0

Quarters

10

12

14

1,000
0

Quarters

10

12

14

(8)

t yd
Col. (1) Col.
(6)
735.7
2,824.7
4,631.9
5,379.0
14,713.2
16,948.4
18,733.6
20,798.9
41,932.7
41,004.1
45,290.1
52,714.5
265,707.0

Original Data
Linear (Original Data)
Deseasonalized Data

12

14

12

14

Exhibit 18.15 Calculating Measurements of Forecast Error


Demand
Forecast
1
1,000
2
1,000
3
1,000
4
1,000
5
1,000
6
1,000
Average Demand:

Month

Deviation
(Error)
-50
70
100
-40
90
50

Actual
950
1,070
1,100
960
1,090
1,050
1036.7

66.7
6.43%
3.3

0
7

Tracking Signals

RSFE

Abs. Dev.

-50
20
120
80
170
220

50
70
100
40
90
50

Sum of
Abs. Dev.
50
120
220
260
350
400

= Mean Absolute Deviation (MAD)


= Mean Absolute Percent Error (MAPE)
= Tracking Signal (TS)

#REF!

#REF!
T rac king Signals

+5
+4
+3
+2
Tracking Signal
+1
+0
-1
-2
-3
-4
-5
0

MAD

Month

50.0
60.0
73.3
65.0
70.0
66.7

TS=RSFE/M
AD
-1.00
0.33
1.64
1.2
2.4
3.3

Exhibit 18.15 Calculating Measurements of Forecast Error


Demand
Forecast
1
1,000
2
1,000
3
1,000
4
1,000
5
1,000
6
1,000
Average Demand:

Month

Deviation
(Error)
-50
70
100
-40
90
50

Actual
950
1,070
1,100
960
1,090
1,050
1036.7

0
7

Tracking Signals

RSFE

Abs. Dev.

-50
20
120
80
170
220

50
70
100
40
90
50

Sum of
Abs. Dev.
50
120
220
260
350
400

66.7
6.43%
3.3

= Mean Absolute Deviation (MAD)


= Mean Absolute Percent Error (MAPE)
= Tracking Signal (TS)

2.394
-2.394

= 3-sigma Upper Control Limit


= 3-sigma Lower Control Limit

2.394
2.394

-2.394
-2.394

T rac king Signals


Upper Control Limit
Lower Control
Limits

+5
+4
+3
+2
Tracking Signal
+1
+0
-1
-2
-3
-4
-5
0

MAD

Month

50.0
60.0
73.3
65.0
70.0
66.7

TS=RSFE/M
AD
-1.00
0.33
1.64
1.2
2.4
3.3

-1
-2
-3
-4
-5
0

Month

Exhibit 18.16 - Causal Relationship: Sales to Housing Starts


Number of
Housing Start
Permits
18
15
12
10
20
28
35
30
20

Year
2002
2003
2004
2005
2006
2007
2008
2009
2010

Sales (in Sq. Yds.)


13,000
12,000
11,000
10,000
14,000
16,000
19,000
17,000
13,000

The regression analysis below uses the regression procedure that


is accessed from the "Data Analysis" package that is an addin to
Excel.

SUMMARY OUTPUT
20,000

Regression Statistics
Multiple R
0.9943856824
R Square
0.9888028854
Adjusted R Square
0.9872032976
Standard Error
331.9545545315
Observations
9

18,000
16,000
14,000
Sales (sq. yrds .)
12,000
10,000

ANOVA

8,000

df
Regression
Residual
Total

6,000
4,000

SS
1 68117532.1
7 771356.7839
8 68888888.89

2,000
0
5

10

15

20

25

30

Num ber of Hous ing Start Pe rm its

35

40

Intercept
X Variable 1

Coefficients Standard Error


6698.492
309.648
344.221
13.845

2,000
0
5

10

15

20

25

30

Num ber of Hous ing Start Pe rm its

35

40

ession analysis below uses the regression procedure that


ed from the "Data Analysis" package that is an addin to

MS
F
Significance F
68117532.1 618.1610568
0.000000
110193.8263

t Stat
21.633
24.863

P-value
Lower 95% Upper 95%Lower 95.0%
Upper 95.0%
0.000
5966.292
7430.693 5966.292 7430.693
0.000
311.483
376.959
311.483
376.959

Solved Problem 1
4 Weeks Ago 3 Weeks Ago 2 Weeks Ago Last Week
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
Sunday

2,200
2,000
2,300
1,800
1,900

2,400
2,100
2,400
1,900
1,800

2,300
2,200
2,300
1,800
2,100

2,400
2,200
2,500
2,000
2,000

2800

2700

3000

2900

Solution:
(a) Simple 4-wk Moving Average

Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
Sunday

Simple 4-wk
Moving
Average
2,325
2,125
2,375
1,875
1,950

4 Weeks Ago 3 Weeks Ago 2 Weeks Ago Last Week


2,200
2,400
2,300
2,400
2,000
2,100
2,200
2,200
2,300
2,400
2,300
2,500
1,800
1,900
1,800
2,000
1,900
1,800
2,100
2,000
2800

2700

0.10
220
200
230
180
190

Weights
0.20
480
420
480
380
360

280
1,300

540
2,660

3000

2900

2,850

0.30
690
660
690
540
630

0.40
960
880
1,000
800
800

=
=
=
=
=

Weighted
Moving
Average
2,350
2,160
2,400
1,900
1,980

900
4,110

1,160
5,600

=
=

2,880
13,670

(b) Weighted Average


Solution
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
Sunday

Solved Problem 3
(1)

Quarter
(t)

Totals

(2)

(3)

Actual
Amount
(y)
1
300
2
3
4
5
6
7
8

540
885
580
416
760
1,191
760

36

5,432

(4)

(5)

Average of the
Same Qtr of Seasonal
Each Year
Factor
358.0

0.53

650.0
1,038.0
670.0

0.96
1.53
0.99
0.53
0.96
1.53
0.99
0.53
0.96
1.53
0.99
12.00

(6)

(7)

Deseasonalized
Demand
Yd
569.0

tyd
569

t2
1

564.1
578.9
587.8
789.0
793.9
779.1
770.0

1,128
1,737
2,351
3,945
4,763
5,454
6,160

4
9
16
25
36
49
64

5,432

26,107

204

900.0
800.0
700.0
600.0
Demand
500.0
400.0
300.0
200.0
Actual
Data

100.0
0.0
0

Period

Enter your actual amounts in the blue area in column C.


(8)

(9)

(yd)2
323,750

d
540.3

318,198
335,148
345,497
622,537
630,293
606,966
592,900

579.9
619.5
659.2
698.8
738.4
778.0
817.6

DESEASONALIZED
FORECAST
t
Period
9
10
11
12

3,775,288

4.50 = t-bar
678.97 = Y-bar
39.62 = b
500.68 = a
Regression Equation is Y = 500.68 + 39.6*t

SEASONALIZED
FORECAST
Seasonal
yd

857.3
896.9
936.5
976.1

Factor
0.53
0.96
1.53
0.99

ys
452.0
858.6
1431.7
963.2

Solved Problem 4
Period
October
November
December
January
February
March

Actual

Forecast

700
760
780
790
850
950

660
840
750
835
910
890

To evaluate the accuracy of your


forecasts, enter the period, the
actual values, and your forecasted
values in the table at the left. The
spreadsheet will calculate the MAD,
tracking signal, and MAPE for your
forecast.

Solution
Actual
Demand
October
November
December
January
February
March

700
760
780
790
850
950

Mean demand

805

Forecast
Actual
Demand Deviation
660
840
750
835
910
890

40
-80
30
-45
-60
60

Totals

Cumulative
Absolute Sum of
Deviation
Deviation Abs. Dev.
(RSFE)
40
40
40
-40
80
120
-10
30
150
-55
45
195
-115
60
255
-55
60
315

-55

315

MAD = 315 / 6 = 52.5


Tracking Signal = -55 / 52.5 = -1.05
MAPE = 52.5 / 805 = 6.52%

You might also like