Forecasting: Time Series Method

Forecasting
Time Series Method

Problem:01The past data for the demand of a product is as given below:
Month Demand(units)
Jan(2017) 584
Feb(2017) 610
Mar(2017) 655
Apr(2017) 747
May(2017) 862
Jun(2017) 913
Jul(2017) 963
a) If a five month moving average is used to forecast the next month’s
demand, compute the forecast for the month of August 2017.
b) Compute a weighted three month moving average for August
2017,where the weights are 0.5 for the latest month,0.3and 0.2 for
the other months respectively.
c) Find exponential smoothing forecast for the month of August 2017
taking alpha as 0.33.
The past data for the demand of a product is as given below:
Month Demand(units)
a) If a five month moving average is used to
Jan(2017) 584 forecast the next month’s demand,
compute the forecast for the month of
Feb(2017) 610 August 2017.
Mar(2017) 655 b) Compute a weighted three month moving
average for August 2017,where the weights
Apr(2017) 747 are 0.5 for the latest month,0.3and 0.2 for
May(2017) 862
the other months respectively.
c) Find exponential smoothing forecast for the
Jun(2017) 913 month of August 2017 taking alpha as 0.33.
Jul(2017) 963
Problem:02
a) From records of delivery orders, management has
accumulated the above data for the past 10 months, from which
it wants to compute 3- and 5-month moving averages.
b) The Company wants to compute a 3-month weighted moving
average with a weight of 50 percent for the October data, a
weight of 33 percent for the September data, and a weight of 17
percent for the August data. These weights reflect the company's
desire to have the most recent data influence the forecast most
strongly.
c) Find exponential smoothing forecast for the month of
November 2017 taking alpha as 0.33.
Adjusted Exponential Smoothing
Period month demand
Use the
1 Jan 37
exponentially 2 Feb 40
smoothed 3 Mar 41
forecast with a 4 Apr 37
= 0.5 and a 5 May 45
smoothing 6 Jun 50
constant for 7 Jul 43
trend, b, of 8 Aug 47
9 Sep 56
0.30
10 Oct 52
11 Nov 55
12 Dec 54
Adjusted Exponential Smoothing (Answer)
.
Computing a Linear Trend Line
X (period) Y (Demand)
1 37
2 40
3 41
4 37
5 45
6 50
7 43
8 47
9 56
10 52
11 55
12 54
Computing a Linear Trend Line
Linear Regression Analysis
• The sales of a company in millions of dollars are as given below:
year sales
2006 82 Using the principle of least
2007 80 squares, fit a straight line
2008 90 trend equation to the above
2009 92 data. Also, determine the
2010
2011
83
94
sum of squares of deviations.
2012 99
Forecast the sales for the
2013 92 years 2014 and2015
ABC sales corporation are in the process of forecasting their sales numbers for each uarter of
coming year. In order to do this, they have pulled up their sales numbers for the last 12 quarters.
These numbers are as follows:
quarter sales
1 600
2 1550
3 1500
4 1500
5 2400 Use the least-squares
6 3100 method to find forecast for
7 2600 the next 4 quarters. Also
8 2900
find out the “standard error
of the estimate”.
9 3800
10 4500
11 4000
12 4900
Mean Absolute Deviation
Mean Squared Error
Mean Absolute percentage Error
Period Actual Forecast (A-F) |A-F| (A-F)^2 (|A-F|/Actual)*100

1 217 215 2 2 4 0.92
2 213 216 -3 3 9 1.41
3 216 215 1 1 1 0.46
4 210 214 -4 4 16 1.90
5 213 211 2 2 4 0.94
6 219 214 5 5 25 2.28
7 216 217 -1 1 1 0.46
8 212 216 -4 4 16 1.89
-2 22 76 10.26
MAD= 2.75
MSE= 10.86
MAPE= 1.28
• 1.use the expo. Smoothing method to forecast the number of units
for june-january. The initial forecast for may was 105 units & alpha
0.2.
• Calculate MAD, MAPE,MSE of forecast error as of the end of
December.
Problem:3
Month Units
May 100 The monthly demand for units manufactured by
Jun 80 ABC manufacturing company is give below:
Jul 110 Req:1) use the exponential method to forecast the
Aug 115 number of units for June-January. The initial
Sep 105 forecast for May was 105nunitsb& alpha 0.2
Oct 110 Req:2) use the Adjusted exponential smoothing to
Nov 125 forecast the number of units for June-January. for
Dec 120 may trend equals to zero. And beta 0.1
Req:3) Calculate MAD, MAPE,MSE of forecast
error as of the end of December.
1 600
2 1550
3 1500
4 1500
5 2400
6 3100
7 2600
8 2900
9 3800
10 4500
11 4000
12 4900
Problem: Exponential smoothing
• The monthly demand for units manufactured by ABC manufacturing company is given blow:
• REQ: Month Units

a) Use the exp. Smoothing May 100
method to forecast the June 80
number of units for june- July 110
january. The initial Aug 115
forecast for may was 105 Sep 105
units and alpha 0.2. Oct 110
Nov 125
b) Cal MAD, MAPE, MSE of
Dec 120
forecasting the error as of
the end of December.
problem
week sales
1 39 Req: 1) calculate
2
3
44
40
moving average(3
4 45 month Moving
5
6
38
43
average
7 39 Req: 2) compute error
analysis

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Forecasting

Time Series Method

Period Actual Forecast (A-F) |A-F| (A-F)^2 (|A-F|/Actual)*100

• REQ: Month Units

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