Assignment:
Explain the key differences between the simple moving average, weighted moving average, and exponential smoothing methods of forecasting. Be sure to explain how the naïve model of forecasting is, in effect, a simple form of moving average forecasting.
Clyde's Chairs and Things sells custom made chairs. Yearly sales from 1983 to 2011 are provided below. After analyzing the information, answer the following questions as completely as possible:
1. Plot the yearly sales data.
2. Compute the sales forecast for 2012 using the following approaches:
a) naïve forecast
b) a four year moving average
c) a weighted 3 year average using .5 for 2011, .3 for 2010, and .2 for 2009
d) exponential smoothing with alpha (smoothing constant) equal to .4 and assuming a 1984 forecast value of 20,050
3. Which method was the most appropriate and why? Which was the least appropriate and why?
|
Year
|
Chair Sales (Qty.)
|
|
1983
|
16,688
|
|
1984
|
21,184
|
|
1985
|
25,594
|
|
1986
|
28,110
|
|
1987
|
25,311
|
|
1988
|
20,112
|
|
1989
|
14,521
|
|
1990
|
10,749
|
|
1991
|
11,343
|
|
1992
|
15,162
|
|
1993
|
15,820
|
|
1994
|
16,533
|
|
1995
|
14,449
|
|
1996
|
15,077
|
|
1997
|
15,152
|
|
1998
|
16,303
|
|
1999
|
15,457
|
|
2000
|
14,199
|
|
2001
|
13,030
|
|
2002
|
13,636
|
|
2003
|
13,037
|
|
2004
|
14,842
|
|
2005
|
14,585
|
|
2006
|
10,916
|
|
2007
|
6,928
|
|
2008
|
5,368
|
|
2009
|
5,074
|
|
2010
|
5,839
|
|
2011
|
4,889
|