CASE STUDY

Tires for You, Inc. Case Study



Tires for You, Inc. Case Study

Calculate a forecast using a simple three-month moving average.

The simple three-month moving average for month't' is given by,

, where denotes the actual demand in month't'.

Now, the forecast for the next period is calculated using the formula

Ft+1 =

Simple Three Month Average

Month

Last Year

3 period

3 period

Error

 

 

moving avg

forecast

 

January

510

 

 

 

February

383

 

 

 

March

1403

765.3

 

 

April

1913

1233.0

765

1147.67

May

1148

1488.0

1233

-85.00

June

893

1318.0

1488

-595.00

July

829

956.7

1318

-489.00

August

638

786.7

957

-318.67

September

2168

1211.7

787

1381.33

October

1530

1445.3

1212

318.33

November

701

1466.3

1445

-744.33

December

636

955.7

1466

-830.33

Total Demand

12752

 

 

 

Avg Demand

1062.67

Total Bias

-215.00

Avg Bias

Bias x

-23.89

Abs Dev

5909.67

Mean Abs Dev

656.63

Simple Average calculation example

(510+383+1403)/3 = 765.3 (March avg, April forecast)

Calculate a forecast using a three-period weighted moving average.  Use weights of 0.60, 0.25, and 0.15 for the most recent period, the second most recent period, and ...