The JOBO Company sells and delivers office supplies to companies, schools, and agencies within a 25-mile radius of its warehouse. The office supply business is competitive, and the ability to deliver orders promptly is a big factor in getting new customers and maintaining old ones. (Offices typically order not when they run low on supplies, but when they completely run out. As a result, they need their orders immediately.) The manager of the company wants to be certain that enough drivers and vehicles are available to deliver orders promptly and that they have adequate inventory in stock. Therefore, the manager wants to be able to forecast the demand for deliveries during the next month. From the records of previous orders, management has accumulated the following data:
Month
Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct.
Orders
110 90 95 85 95 110 115 110 115 120
a. Based on MAD, would you use a 3-month moving average, a 4-month moving average or a linear regression model?
b. What would be October's estimate using a simple regression model?