BUS411 HOMEWORK 1 CHAPTER 3 Complete Solution

Question: #386

1. National scan, Inc., sells radio frequency inventory tags. Monthly sales for a seven-month
period were as follows:
Month Sales
(units)
Feb 19
Mar 18
Apr 17
May 20
Jun 19
Jul 22
Aug 20
a. Forecast September sales volume using the naïve approach.
b. Forecast September sales volume using a linear equation. a=17.43, b = 0.46.
c. Forecast September sales volume using a five-month moving average
d. Forecast September sales volume using a weighted average using .60 for August, .30 for
July, and .10 for June.
e. Forecast September sales volume using Exponential smoothing with a smoothing
constant equal to .20, assuming a March forecast of 19.
2, A dry cleaner uses exponential smoothing to forecast equipment usage at its main plant.
August usage was forecast to be 88 percent of capacity; actual usage was 89.6 percent of
capacity. A smoothing constant (Alpha) of .2 is used.
a. Prepare a forecast for September.
b. Assuming actual September usage of 92 percent, prepare a forecast for October usage.
3. A cosmetics manufacturer’s marketing department has developed a linear trend equation that
can be used to predict annual sales of its popular Hand & Foot Cream.
F t t = 80 +14
Where
t F Annual forecast in sales (bottles)
t= 0 corresponds to 1990
a. Predict annual sales for the year 2006 using the equation.
4. The manager of travel agency has been using a seasonally adjusted forecast to predict demand
for packaged tours. The actual and predicted values are as follows:
Period Demand Predicted
1 129 124
2 194 200
3 156 150
4 91 94
5 85 80
6 132 140
7 126 128
8 126 124
9 95 100
10 149 150
a. Compute MAD for the 5th period
b. Compute MAPE for the 10th period

Solution: #403

BUS411 HOMEWORK 1- CHAPTER 3 Complete Solution

a) We know that using Naive the forecast for any period is the actual value for last period. So here using naïve approach the forecasted September sale I the actual sale for August which is 20.
b) Note that September is 8th data point in the set so the forecasted sales using linear equation is, (17...