Calculate Three Forecasts Using the Following Data

question 94

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 (F3) of 79.0 and an alpha of 0.2. 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 .70, .20, 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? $$\begin{array} { | l | l | } \hline \text { Month } & \text { Demand } \\\hline 1 & 75 \\\hline 2 & 79 \\3 & 83 \\4 & 80 \\5 & 87 \\6 & 81 \\7 & 74 \\8 & 88 \\9 & 83 \\10 & 85 \\\hline\end{array}$$

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Definitions:

Secured Creditor

A lender that is granted a specific property interest as collateral for a loan, giving the creditor a right to repossess the property if the loan is defaulted.

Disposition

The act of transferring or disposing of an asset or property, or the manner in which someone is inclined to behave or feel.

Collateral

Assets pledged by a borrower to secure a loan or other credit, which the lender can seize if the borrower defaults.

PMSI

Purchase Money Security Interest, a legal claim that allows a lender to repossess or foreclose on property if the borrower defaults, specifically when the loan was used to purchase the property.