Narsee Monjee Institute of Management Studies

Optimization Modelling for Business Analytics

MBA Core: Trimester II Sept.,2019
Title: Forecasting-I

1) The accompanying table shows demand for the past 16 months:

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Month 1 2 3 4 5 6 7 8
Demand 8.9 9.5 7.9 8.2 8.3 8.9 9.2 8.9
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Month 9 10 11 12 13 14 15 16
Demand 9.1 9.6 10.3 9.6 9.0 8.8 9.4 8.9
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Predict the demand for the period 17th month using:
(i) Simple Average Method
(ii) 3 Months Moving Average
(iii) 4 Months Moving Average
(iv) 3 Months Weighted Moving Average (weights – 0.5, 0.3, 0.2)
(v) Exponential smoothing, using constants 0.2 & 0.4
Which method of forecasting will you choose for future forecasting? Why?

2) The accompanying table shows sales (in 1000s) for the past 12 weeks.
Month 1 2 3 4 5 6 7 8
Sales 17 21 19 23 18 16 20 18
Month 9 10 11 12
Sales 22 20 15 22
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Predict the demand for the period 13th month using:
(i) Simple Average Method
(ii) 3 Months Moving Average
(iii) 3 Months Weighted Moving Average
(iv)Exponential smoothing, using constants 0.2 & 0.4
Which method of forecasting will you choose for future forecasting? Why?

3) It is surmised that the monthly consumption of a spare part, in a large textile mill, is subject to
random fluctuations with no significant trend or seasonal variations. It is proposed to use a
single parameter exponential smoothing method for one-month ahead forecast. Table below
shows the consumption data of the past 10 months. Compute the forecasts using a smoothing
constant of α= 0.9 and α = 0.5. Make a comparative evaluation on the basis two measures and
assess which smoothing constant will give better forecasts.
Assume forecast for month 1 as 170.

Month 1 2 3 4 5 6 7 8 9 10
Sale 160 110 130 160 180 150 200 220 180 150

4) Month wise demand during January-November of a particular item is given below:

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Month Actual demand
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January 2000
February 1350
1
 March 1950
April 1975
May 3100
June 1750
July 1550
August 1300
September 2200
October 2770
November 2350
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(i) Forecast demand for December, by taking =0.1, 0.5 and 0.9.
(ii) Compute mean absolute deviation (M.A.D.) and mean squared error (M.S.E.) in
each case and comment on selection of .

5) The accompanying table shows sales (in thousands of units) for the past 16 Quarters:
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Year 1 2
Quarter 1 2 3 4 1 2 3 4
Sales 4.8 4.1 6.0 6.5 5.8 5.2 6.8 7.4
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Year 3 4
Quarter 1 2 3 4 1 2 3 4
Sales 6.0 5.6 7.5 7.8 6.3 5.9 8.0 8.4
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Calculate the Seasonal Index.

6) The accompanying table shows sales (in thousands of units) for the past 16 Quarters:
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Year 1 2
Quarter 1 2 3 4 1 2 3 4
Sales 28 37 33 24 27 40 30 23
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Year 3 4
Quarter 1 2 3 4 1 2 3 4
Sales 31 36 33 30 31 39 36 26
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Predict the demand for the four Quarters of the 5 th Year