Calculate Three Forecasts Using the Following Data $\mathrm { F } _ { 3 }$

question 68

Essay

Calculate three forecasts using the following data.First,for periods 4 through 11,develop the exponentially smoothed forecasts using a forecast for period 3 ( $\mathrm { F } _ { 3 }$ )of 120.0 and an alpha of 0.3.Second,calculate the 3-period moving average forecast for periods 4 through 11.Third,calculate the weighted moving average for periods 4 through 11,using weights of .60,.30,and .10.Calculate the mean absolute deviation (MAD)and the cumulative sum of forecast error (CFE)for each forecasting procedure.Which forecasting procedure would you select? Why?
$$\begin{array} { | c | c | } \hline \text { Month } & \text { Demand } \\\hline 1 & 120 \\2 & 115 \\3 & 125 \\4 & 119 \\5 & 127 \\6 & 114 \\7 & 120 \\8 & 124 \\9 & 116 \\10 & 137 \\\hline\end{array}$$

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Definitions:

High Initial Price

A pricing strategy where a product is introduced to the market at a high price point to maximize revenue from less price-sensitive customers before possibly lowering the price.

Skimming Pricing

A pricing strategy involving setting high prices initially to target consumers who are willing to pay more for new or unique products.

Innovative Product

A new or significantly improved product that meets unique customer needs or opens up new markets.

High Initial Price

A pricing strategy where a new product is introduced to the market with a relatively high price point in order to maximize revenues from early adopters.