Forecasting Exercise
You are the supply chain manager for an electronics-manufacturing company. In this assignment, you will use the following data to obtain forecasts for your company through various forecasting techniques.
Quarter
Forecast
Actual Demand
Error
4Q 2008
200
220
1Q 2009
220
215
2Q 2009
215
210
3Q 2009
210
220
4Q 2009
220
225
1Q 2010
225
240
2Q 2010
240
255
3Q 2010
260
4Q 2010
270
1Q 2011
Consolidate the results of the following problems in a 2- to 3-page report in a Microsoft Word document. Do not use Microsoft Excel utilities for this assignment.
Using the three quarters moving average, find out the forecasts for 3Q 2010, 4Q 2010, and 1Q 2011.
Compute the forecasts for 3Q 2010, 4Q 2010, and 1Q 2011 using exponential smoothing with a smoothing factor of 0.6.
Compute the forecasts for all quarters of 2010 using the three quarter weighted moving average, with the most recent data weighted at 0.5, the second-most recent data weighted at 0.35, and the third-most recent data weighted at 0.15.
Using the data provided in the above table, explain what forecasting techniques are being used for 2008 and the first two quarters of 2009.
Computed the forecasting error using the exponential smoothing technique.
Computed the forecasting error using the weighted moving average method.
On the basis of your calculations, explain which technique provides the most accurate forecast for your company. Explain your answer with critical reasoning.