Week 1 Homework
Bryan Kelly
DeVry University

Problem 4.2

A) Plot the above data on a graph. Do you observe any trend, cycles, or random variations?

There does not appear to be any type of pattern or correlation, negative or positive. B) Starting in year 4 and going to year 12, forecast demand using a 3-year moving average. Plot your forecast on the same graph as the original data.

It looks to me as if the rise is steady

C) Starting in year 4 and going to year 12, forecast demand using a 3-year moving average with weights of .1, .3, and .6, using .6 for the most recent year. Plot this forecast on the same graph.

So the weighted forecast is quite the same as the regular forecast. The only real differences that I see are in year 6 and 9. They are higher than the regular forecast due to the fact that their previous years have a spiked demand.
Problem 4.6 A) Plot the monthly sales data.

B) Forecast January sales using each of the following: 1. Naive method. 2. A 3-month moving average. 3. A 6-month weighted average using .1, .1, .1, .2, .2, and .3, with the heaviest weights applied to the most recent months.
4. Exponential smoothing using an α = .3 and a September forecast of 18.
5. A trend projection.

C) With the data given, which method would allow you to forecast next March’s sales?
I think that I would choose to use number 2, the 3 month moving average. It seems to be more consistent than the other methods.

Problem 4.9 A) Use a 2-month moving average on all the data and plot the averages and the prices.

B) Use a 3-month moving average and add the 3-month plot to the graph created in part (A).

C) Which is better (using the mean absolute deviation): the 2-month average or the 3-month average?
Any time you have more data to build a conclusion off of, you are better off. For this reason, I