1 answer

1.- Using time series shown in the table a) Determine if moving averages is an adequate...

Question:

1.- Using time series shown in the table

a) Determine if moving averages is an adequate method to use for the time series shown in the table.

b) If the answer to a) is YES, then apply the weighted moving averages method using

alpha1 = 0.5

alpha2 = 0.4

alpha3 = 0.1

Week

Demand

1

200

2

250

3

175

4

186

5

225

6

240

7

250

8

190

9

185

10

210

11

205

12

207

13


Answers

First, let’s calculate the 3 period moving average. It is done by averaging the previous three periods and using it as a forecast for the fourth period. It is shown in 3MA column. Next we calculate the error, absolute error, square of the error and absolute percentage of the error. Next we calculate the running sum of forecasting error (RSFE), mean absolute deviation (MAD), mean square of error (MSE) and mean absolute percentage error (MAPE).

From the values we can see that the RSFE, MAD and MAPE values are not very large and thus the moving average is not a bad indicator to forecast the value.

Now, we can use the alpha values with in order to calculate the weighted moving average.

The highest value will be used for the latest period and the lowest value for the farthest period.

The calculated values are shown below.


Week 1 Week Demand 3MA Error Abs Error Sq Error %Error WMA 200 250 175 186 208.33 22.33 22.33 498.78 225 240 250217.00 33.00 33.00 1089.00 0.13 190 238.33 48.33 48.332336.11 0.25 185 210 205 207 0.12 0.09 0.19 207.5 188 204.4 228.6 243.5 219 193.5 198 205 206.5 .11 21.33 44.671995.11 455 203.67 195.33 44.67 21.33 0.23 0.01 0.05 0.03 10 226.6741.67 41.67 1736.11 208.33 195.00 10.00 200.00 207.33 10 1.67 1.67 10.00 7.00 2.78 100.00 49.00 12 11 13 12 14 15 16 17 18 19 7.00 13 5.33 25.56 918.00 0.12 RSFE MAD MSE MAPE ...Sheet716 Sheet717 Sheet718 Sheet719Sheet720 Sheet721 Sheet722 Sheet723 + 14596

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