Demand Forecasting &

ABC Analysis
The Answer of Exercise II
Single Moving Average (3 & 5 Months)
3 Months Single Moving Average 5 Months Single Moving Average
Demand (1.000
Month
Kg)
Forecast Error MAD MSE Forecast Error MAD MSE

Jan 20

Feb 21

Mar 19

Apr 17 20 -3 3 9

Mei 22 19 3 3 9

Juni 24 19.33 4.67 4.67 21.78 19.8 4.2 4.2 17.64

Juli 18 21 -3 3 9 20.6 -2.6 2.6 6.76

Agst 21 21.33 -0.33 0.33 0.11 20 1 1 1

Sept 20 21 -1 1 1 20.4 -0.4 0.4 0.16

Oct 23 19.67 3.33 3.33 11.11 21 2 2 4

Nov 22 21.33 0.67 0.67 0.44 21.2 0.8 0.8 0.64

Total 4.33 19.00 61.44 5.00 11.00 30.20

Average 0.54 2.38 7.68 0.83 1.83 5.03

Single Moving Average
Single Moving Average

From the data of MAD and MSE above the 5 month single moving averages
give better forecast than 3 month single moving averages.
Double Moving Average
Period Demand 4 Years Single Moving Average 4 Years Double Moving Average a Value b Value Forecast

1 120

2 125

3 129

4 124 124.50

5 130 127.00

6 140 130.75

7 128 130.50 128.19 132.81 1.55

8 136 133.50 130.44 136.56 2.05 134.36

9 142 136.50 132.81 140.19 2.47 138.61
10 130 134.00 133.63 134.38 0.25 142.66

11 135 135.75 134.94 136.56 0.54 134.63

12 144 137.75 136.00 139.50 1.17 137.11

Double Moving Average
To Forecast with 4 years Double Moving Average Method, we should have the demand
data since previous 7 years to forecast the demand in the eighth year.
 Single Exponential Smoothing
α= 0.10 α= 0.50 α= 0.90
Month Demand
Forecast MAD MSE Forecast MAD MSE Forecast MAD MSE
Jan 20

Feb 21 20 1 1 20 1 1 20 1 1

Mar 19 20.1 1.1 1.21 20.5 1.5 2.25 20.9 1.9 3.61

Apr 17 19.99 2.99 8.94 19.75 2.75 7.56 19.19 2.19 4.80

Mei 22 19.69 2.31 5.33 18.38 3.63 13.14 17.22 4.78 22.86

Juni 24 19.92 4.08 16.63 20.19 3.81 14.54 21.52 2.48 6.14

Juli 18 20.33 2.33 5.43 22.09 4.09 16.76 23.75 5.75 33.09

Agst 21 20.10 0.90 0.82 20.05 0.95 0.91 18.58 2.42 5.88

Sept 20 20.19 0.19 0.03 20.52 0.52 0.27 20.76 0.76 0.57

Oct 23 20.17 2.83 8.02 20.26 2.74 7.50 20.08 2.92 8.55

Nov 22 20.45 1.55 2.40 21.63 0.37 0.14 22.71 0.71 0.50

Des 19 20.61 1.61 2.58 21.82 2.82 7.93 22.07 3.07 9.43

Total 20.88 52.39 24.18 71.99 27.99 96.43

Average 1.90 4.76 2.20 6.54 2.54 8.77

Single Exponential Smoothing

Each α give different MAD and MSE as shown in previous table. When detailing α value and real demand in each
month show that α=0.90 give nearest forecast to lower and highest real demand value 17 and 24, α=0.50 give
nearest forecast to 22 and 23, and others give nearest forecast to α=0.10. In conclusion, the lowest α value give
the higher weight or lowest error than others.
Single Exponential Smoothing
Double Exponential Smoothing
Period Demand Single Exponensial Smoothing Double Exponensial Smoothing a Value b Value Forecast

1 120 120 120

2 125 121 120.2 121.8 0.2 120

3 129 122.6 120.68 124.52 0.48 122

4 124 122.88 121.12 124.64 0.44 125

5 130 124.30 121.76 126.85 0.64 125.08

6 140 127.44 122.89 131.99 1.14 127.49

7 128 127.55 123.83 131.28 0.93 133.13

8 136 129.24 124.91 133.58 1.08 132.22

9 142 131.79 126.29 137.30 1.38 134.66

10 130 131.44 127.32 135.56 1.03 138.68

11 135 132.15 128.28 136.01 0.97 136.59

12 144 134.52 129.53 139.51 1.25 136.98

Double Exponential Smoothing
Tracking Signal
Period Demand Forecast Error (e) Absolute Error Absolute %
Error
1 1600 1523 77 77 5929 4.8
2 2200 1810 390 390 152100 17.7
3 2000 2097 -97 97 9409 4.9
4 1600 2383 -783 783 613089 48.9
5 2500 2670 -170 170 28900 6.8
6 3500 2957 543 543 294849 15.5
7 3300 3243 57 57 3249 1.7
8 3200 3530 -330 330 108900 10.3
9 3900 3817 83 83 6889 2.1
10 4700 4103 597 597 356409 12.7
11 4300 4390 -90 90 8100 2.1
12 4400 4677 -277 277 76729 6.3
Total 0 3494 1664552 133.9
Average 291.17 138712.7 11.16
RSFE MAD MSE MAPE
Tracking Signal Answer
Tracking Signal Answer
ABC Analysis Answer
Sequence Product Product Cost Yearly Yearly % of the Cumulative % Category
number Description per Usage Turnover Yearly
Piece Turnover
1 5 Flange € 10.00 300 € 3,000.00 50.0% 50.0% A
2 8 Paint € 6.00 300 € 1,800.00 30.0% 80.0% A
3 1 Spindle € 0.50 1,000 € 500.00 8.3% 88.3% B
4 10 Riddle € 2.00 175 € 350.00 5.8% 94.2% B
5 4 Ball Bearing € 3.00 50 € 150.00 2.5% 96.7% C
6 9 Chock € 20.00 7 € 140.00 2.3% 99.0% C
7 6 Sheet Metal € 7.00 4 € 28.00 0.5% 99.5% C
8 2 Clamp € 1.00 24 € 24.00 0.4% 99.9% C
9 7 Bar € 0.50 10 € 5.00 0.1% 100.0% C
10 3 Pushing Clamp € 0.25 12 € 3.00 0.1% 100.0% C
Total € 6,000.00 100.0%
Grafik
100.0%

90.0%

80.0%

70.0%

60.0%

50.0% Series1

40.0%

30.0%

20.0%

10.0%

0.0%
1 2 3 4 5 6 7 8 9 10
Data on sales and advertising dollars for the past six months are shown below.

$Sales (Y) $Advertising (X)

100.000 2000
150.000 3000
125.000 2500
50.000 1000
170.000 3500
135.000 2750

Determine the linear relationship between sales and advertising dollars.

Linear Relationship Answer