Ms. Winnie Lin's company sells computers. Monthly sales for a six-month period are as follows: Plot the monthly data on a sheet of graph paper. Compute the sales forecast for July using the following approaches:
|
Month
|
Sales
|
|
Jan
|
18,000
|
|
Feb
|
22,000
|
|
Mar
|
16,000
|
|
Apr
|
18,000
|
|
May
|
20,000
|
|
Jun
|
24,000
|
(1) a three-month moving average;
(2) a weighted three-month moving average using .50 for June, .30 for May, and .20 for April;
(3) a linear trend equation;
(4) exponential smoothing with a (smoothing constant) equal to .40, assuming a February forecast of 18,000.
Which method do you think is the least appropriate? Why?
Calculate the MAD for each of the four techniques in part b. Which is the best? Why?