Activity 3
Complete the following case study and problems and submit the results in either a Microsoft Word document or a Microsoft Excel spreadsheet. If you choose to use an Excel spreadsheet, place each problem on a separate sheet and label the tab with problem number. Save your document with a descriptive file name, including the assignment and your name.
Chapter 4:
North-South Airline Case Study: In January 2008, Northern Airlines merged with Southeast Airlines . . .
3-1 Data collected on the yearly demand for 50-pound bags of fertilizer at Wallace Garden Supply are shown in the following table.
Year Demand for fertilizer
(1,000s of bags) 1 4 2 6 3 4 4 5 5 10 6 9 7 10 8 11 9 15
10 16
11 18
a. Develop a 3-year moving average to forecast sales.
b. Then estimate demand again with a weighted moving average in which sales in the most recent year are given a weight of 3 and a weight of 2 for the second past year and sales in the other 2 years are each given a weight of 1.
c. Which method do you think is best?
In this case, the 3 year moving average is the better method as the Mean Absolute Deviation (MAD) is only 3.042 as compared to 3.347 for the weighted moving average method. What it actually means is that each forecast missed the actual value by 3.042 units instead of 3.347 units.
d. Develop a trend line for the demand for fertilizer using any computer software.
e. You have now developed three different forecasts. These are a 3-year moving average, a weighted moving average, and a trend line. Which one would you use? Explain your answer.
By observing the MAD in part (d), it can be observed that the value is the smallest among the 3 methods, hence I will choose the trend line as the forecast predicted is more accurate. Moreover the demand for the future can also be seen.
3-2 Sales of Cool-Man air conditioners have grown steadily during the past 5 years:
Year Sales
1 440
2 465
3 520
4 573
5 586
6 ?
Chapter 4:
North-South Airline Case Study: In January 2008, Northern Airlines merged with Southeast Airlines . . .
3-1 Data collected on the yearly demand for 50-pound bags of fertilizer at Wallace Garden Supply are shown in the following table.
Year Demand for fertilizer
(1,000s of bags) 1 4 2 6 3 4 4 5 5 10 6 9 7 10 8 11 9 15
10 16
11 18
a. Develop a 3-year moving average to forecast sales.
b. Then estimate demand again with a weighted moving average in which sales in the most recent year are given a weight of 3 and a weight of 2 for the second past year and sales in the other 2 years are each given a weight of 1.
c. Which method do you think is best?
In this case, the 3 year moving average is the better method as the Mean Absolute Deviation (MAD) is only 3.042 as compared to 3.347 for the weighted moving average method. What it actually means is that each forecast missed the actual value by 3.042 units instead of 3.347 units.
d. Develop a trend line for the demand for fertilizer using any computer software.
e. You have now developed three different forecasts. These are a 3-year moving average, a weighted moving average, and a trend line. Which one would you use? Explain your answer.
By observing the MAD in part (d), it can be observed that the value is the smallest among the 3 methods, hence I will choose the trend line as the forecast predicted is more accurate. Moreover the demand for the future can also be seen.
3-2 Sales of Cool-Man air conditioners have grown steadily during the past 5 years:
Year Sales
1 440
2 465
3 520
4 573
5 586
6 ?