solution

X = 38

Replace “X” by the estimated value.

1. The demand manager of Maverick Jeans is responsible for ensuring sufficient warehouse space for the finished jeans that come from the production plants. It has occasionally been necessary to rent pubic warehouse space, something that Maverick would like to avoid. In order to determine the space requirements, the demand manager is evaluating a few forecasts. The demand (in 1,000 case units) for the last fiscal year is shown below.

a. Use a 3-month moving average to estimate the month-in-advance forecast of demand for months 4-14 and generate a forecast for the fifteenth month.

b. Repeat part “a”, use a 3-month weighted moving average with the following weights:

First weight (most recent month): [38/90]

Second weight: [1-(38/90)]*0.65

Third weight: [1-(38/90)]*0.35

Use all decimal places for the weights.

c. Use X as the forecast for month 1. Use an exponential smoothing model with a = 38/90 to estimate the month-in-advance forecast of demand for months 2-14 and generate a forecast for the fifteenth month.

d. Use X as the forecast for month 1. Use an exponential smoothing model with a = [1- (38/90)] to estimate the month-in-advance forecast of demand for months 2-14 and generate a forecast for the fifteenth month.

e. Compare the average forecast error and MAD for the forecasting methods in parts a., b., c., and d. Based on these error calculations, which of the four forecast methods would you recommend? Why?