Table 11.1.

-Use the information in Table 11.1. Your boss has asked you to find a good technique to forecast short- term demand for an important product. You have decided to test the following four techniques against the historical data already given:
-Three- month simple moving average -Three- month weighted moving average, with weight of 0.6 for the most recent month, 0.3 for the second- most- recent month, and 0.1 for the third- most- recent month
-Three- month weighted moving average, with weights of 0.5 for the most recent month, 0.3 for the second- most- recent month, and 0.2 for the third- most- recent month
-Exponential smoothing (a = 0.3 and the forecast for March was 55)
Use each of the four techniques to forecast April through August, and then use the five months of forecasts to calculate MAD. Round all forecasts to the nearest whole number just before doing your MAD calculations. Which of the four techniques is best in terms of MAD?
A) three- month weighted moving average (0.5, 0.3, 0.2)
B) three- month weighted moving average (0.6, 0.3, 0.1)
C) exponential smoothing (a = 0.3)
D) three- month simple moving average

Question

Table 11.1.

-Use the information in Table 11.1. Your boss has asked you to find a good technique to forecast short- term demand for an important product. You have decided to test the following four techniques against the historical data already given: 
-Three- month simple moving average -Three- month weighted moving average, with weight of 0.6 for the most recent month, 0.3 for the second- most- recent month, and 0.1 for the third- most- recent month
-Three- month weighted moving average, with weights of 0.5 for the most recent month, 0.3 for the second- most- recent month, and 0.2 for the third- most- recent month
-Exponential smoothing (a = 0.3 and the forecast for March was 55)
Use each of the four techniques to forecast April through August, and then use the five months of forecasts to calculate MAD. Round all forecasts to the nearest whole number just before doing your MAD calculations. Which of the four techniques is best in terms of MAD?
A) three- month weighted moving average (0.5, 0.3, 0.2) 
B) three- month weighted moving average (0.6, 0.3, 0.1) 
C) exponential smoothing (a = 0.3) 
D) three- month simple moving average

Quizplus · Accepted Answer

Exponential smoothing with a smoothing constant of 0.3 typically provides a good balance between responsiveness and stability, often resulting in a lower Mean Absolute Deviation (MAD) compared to moving averages, especially when the data has some level of randomness or trend.

Table 11.1. -Use the Information in Table 11.1. Your Boss Has Asked