Jim's Department at a Local Department Store Has Tracked the Sales

question 62

Short Answer

Jim's department at a local department store has tracked the sales of a product over the last ten weeks. Forecast demand using exponential smoothing with an alpha of 0.4, and an initial forecast of 28.0 for period 1. Calculate the MAD. What do you recommend?
$$\begin{array} { | c | c | } \hline \text { Period } & \text { Demand } \\\hline 1 & 24 \\\hline 2 & 23 \\\hline 3 & 26 \\\hline 4 & 36 \\\hline 5 & 26 \\\hline 6 & 30 \\\hline 7 & 32 \\\hline 8 & 26 \\\hline 9 & 25 \\\hline 10 & 28 \\\hline\end{array}$$
$\begin{array}{|c|c|l|l|l|l|}\hline\begin{array}{c}\text { Answer: } \\\text { Period }\end{array} & \text { Demand } & \text { Forecast } & \text { Error } & & \text { Absolute } \\\hline 1 & 24 & 28.00 & & & \\\hline 2 & 23 & 26.40 & -3.40 & & 3.40 \\\hline 3 & 26 & 25.04 & 0.96 & & 0.96 \\\hline 4 & 36 & 25.42 & 10.58 & & 10.58 \\\hline 5 & 26 & 29.65 & -3.65 & & 3.65 \\\hline 6 & 30 & 28.19 & 1.81 & & 1.81 \\\hline 7 & 32 & 28.92 & 3.08 & & 3.08 \\\hline 8 & 26 & 30.15 & -4.15 & & 4.15 \\\hline 9 & 25 & 28.49 & -3.49 & & 3.49 \\\hline 10 & 28 & 27.09 & 0.91 & & 0.91 \\\hline & & \text { Total } & 2.64 & & 32.03 \\\hline & & \text { Average } & 0.29 & & 3.56 \\\hline & & & \text { Bias } & & \text { MAD } \\\hline\end{array}$
The tracking signal RSFE/MAD = 2.64/3.56 = .742 is low; therefore, keep using the forecasting method.

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Definitions:

Negotiate Differently

Engaging in negotiation processes in varied manners, potentially adapting strategies based on the context or parties involved.

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The process by which individuals unconsciously or consciously select which sensory information to focus on and process.

Internal Factor

Elements within an organization or individual that can affect performance, decisions, and outcomes, such as values, culture, or resources.

Perceptual Process

The sequence of steps that includes the gathering, organizing, and interpretation of sensory information to understand an environment or situation.