City Cycles has just started selling the new XYZ-10 mountain bike, and below are the monthly sales. Amit wants to forecast by exponential smoothing (setting February's forecast
equal to January's sales) with alpha = 0.1
Barbara wants to use a 3-period moving average.
Sales Amit Barbara Amit error Barbara Error
January 400
February 300 400
March 410
April 375
May
a) Is there a strong linear trend in sales over time?
b) Fill in the table with what Amit and Barbara each forecast for May and the earlier months, as relevant.
c) Assume that May's figure turns out to be 405. Append the table with error columns then calculate MAD for both Amit's and Barbara's method.
d) Based on these calculations, which method seems more accurate?