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Homework Solution Weighted Averages - Exponential Smoothing - Trend

MGMT E-5070. Homework Solution Weighted Averages - Exponential Smoothing - Trend. TM. Cool-Man Air Conditioners. Manual Computer-Based. Part B. Cool-Man Air Conditioners. REQUIREMENT: What effect did the smoothing coefficient have

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Homework Solution Weighted Averages - Exponential Smoothing - Trend

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  1. MGMT E-5070 Homework SolutionWeighted Averages - Exponential Smoothing - Trend TM Cool-Man Air Conditioners Manual Computer-Based Part B

  2. Cool-Man Air Conditioners REQUIREMENT: • What effect did the smoothing coefficient have on the forecast for Cool-Man air conditioners? • Which smoothing coefficient gives the most accurate forecast?

  3. Cool-Man Air Conditioners

  4. Cool-Man Air Conditioners

  5. Cool-Man Air Conditioners

  6. Cool-Man Air Conditioners MADα = 0.30 = 372.8 / 5 = 74.56 MADα = 0.60 = 259.0 / 5 = 51.80 MADα = 0.90 = 190.5 / 5 = 38.10 Because it has the lowest MAD , the smoothing coefficient α = 0.90 gives the most accurate forecast.

  7. WE SELECT THE“FORECASTING” MODULE

  8. WE WANT TO DEVELOP A NEWPROGRAM FOR MOVING AVERAGES & EXPONENTIAL SMOOTHING, WE SELECT “TIME SERIES ANALYSIS”

  9. THE DATA CREATION SCREEN • Insert the number of past years • We can label those months or years any way we want • We can also insert a title for the problem

  10. “ The Data Table ” Appears We insert the annual sales We can also still change the periods titles, i.e. 1st Year, 1st Month, etc. “Naïve Method” is the default method

  11. We first forecast via Exponential smoothing ( a = 0.30 )

  12. The 6th Year Forecast ( 521.8 units ) MAD Forecast Error ( 74.56 units )

  13. We now forecast via Exponential smoothing ( a = 0.60 )

  14. The 6th Year Forecast ( 565.37 units ) The MAD Forecast Error ( 51.8 units )

  15. We now forecast via Exponential Smoothing ( a = 0.90 )

  16. The 6th Year Forecast ( 581.4 units ) MAD Forecast Error ( 38.1 units )

  17. To forecast via 3-Year Moving Average each period is weighted evenly , ( “1” )

  18. The 6th Year Forecast ( 555 units ) The MAD Forecast Error ( 67 units )

  19. We now forecast via The Trend Projection Method

  20. The 6th Year Forecast ( 622.8 units ) Y = 421.2 + (33.6)(6) = 622.8 The Regression Line Y = 421.2 + 33.6X

  21. Cool-Man Air Conditioners REQUIREMENT: • Would you use exponential smoothing with a smoothing coefficient of a = 0.30, a three (3) year moving average, or a trend to predict the sales of Cool-Man air conditioners?

  22. Cool-Man Air ConditionersTHREE YEAR MOVING AVERAGE

  23. Cool-Man Air ConditionersTIME SERIES FORECAST

  24. Cool-Man Air Conditioners Regression ( trend line ) is the preferred method because of its low MAD ( mean absolute deviation )

  25. Homework SolutionWeighted Averages - Exponential Smoothing - Trend Cool-Man Air Conditioners TM Manual Computer-Based Part B

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