Calculate Three Forecasts Using the Following Data

question 58

Essay

Calculate three forecasts using the following data. First, for periods 4 through 10, develop the exponentially smoothed forecasts using a forecast for period 3 (F₃) of 45.0 and an alpha of 0.4. Second, calculate the three-period moving-average forecast for periods 4 through 10. Third, calculate the weighted moving average for periods 4 through 10, using weights of .70, .20, and .10, with 0.70 applied to the most recent data. 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?

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Definitions:

Performance Measures

Metrics used to evaluate the efficiency, effectiveness, and performance of an organization's activities or employees.

Incentives

Rewards or benefits offered to encourage specific actions or behaviors, particularly in contexts of employment or economics.

Incremental Costs

The additional costs incurred when increasing the level of an activity or output by one unit.

Production Capacity

The maximum output that a manufacturing facility can produce under normal working conditions.