The table below shows the demand for a product for each of the last 9 months.
Month Demand
1. 215
2. 260
3. 282
4. 305
5. 279
6. 293
7. 278
8. 281
9. 250
Calculate a two month moving average (MAF) for months two through nine. What is the forecast for the demand in month ten?
Apply exponential smoothing (ESF) with a smoothing constant of 0.2 to determine a forecast for the demand in month ten.
Provide a chart that shows actual, MAF, and ESF.
Using MAD, MSE, and MAPE on both forecasts (MAF and ESF) for months three through nine, which of the two forecasts for month ten do you prefer and why?
What value of alpha do you need for ESF to obtain the same MAD as MAF at a two month moving average? Tip: use “goal seek” in excel to calculate this. Provide the value of alpha rounded to 3 decimal places.