A forecasting system with trend and seasonal factors has been installed in a company. Seasonality is specified with respect to quarters (i.e. 4 seasons), and prior to the current quarter (beginning of quarter 5) most recent values of the forecast parameters are as follows:
seasonal factors: 0.9, 1, 0.8, 1.3 for quarters 1 through 4, respectively,
slope (trend factor): 10.4,
intercept (level factor): 100, and
all smoothing parameters are 0.1.
a) What is the forecast for quarter 5 and quarter 6?
b) The current quarter’s (quarter 5) demand is realized and is 80 units. Update all the factors.
c) What is the MAD value computed for quarter 5? If smoothing approach is used to update MAD values, what is the new MAD value if the most recent MAD value was 15? Note that all smoothing parameters are 0.1