Discuss about the quality of the forecast for the year

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Reference no: EM132156444

(Demand Forecasting)

Prob. 1 (p. 200 of the Textbook)

Consider monthly demand for the ABC Corporation, as shown below. Forecast the monthly demand for Year 6 using the static method for forecasting. Discuss about the quality of the forecast for the Year 6, using the BIAS, MAD, and TS.

Sales	Year 1	Year 2	Year 3	Year 4	Year 5
JAN	2000	3000	2000	5000	5000
FEB	3000	4000	5000	4000	2000
MAR	3000	3000	5000	4000	3000
APR	3000	5000	3000	2000	2000
MAY	4000	5000	4000	5000	7000
JUN	6000	8000	6000	7000	6000
JUL	7000	3000	7000	10000	8000
AUG	6000	8000	10000	14000	10000
SEP	10000	12000	15000	16000	20000
OCT	12000	12000	15000	16000	20000
NOV	14000	16000	18000	20000	22000
DEC	8000	10000	8000	12000	8000
Total	78000	89000	98000	115000	113000

(a) Find the seasonal index for each month.

(b) Forecast the monthly demand for Year 6. Use the following equation for the deseasonalized regression model:

F_t= 6,712.67 + 48.15 t

Prob. 2 (TS Control Chart)

The tracking signals (TS) computed using past demand history for three different products are as follows. Each product used the same forecasting technique.

TS 1 TS 2 TS 3

Period 1 -2.70 1.54 0.10

Period 2 -2.32 -0.64 0.43

Period 3 -1.70 2.05 1.08

Period 4 -1.10 2.58 1.74

Period 5 -0.87 -0.95 1.94

Period 6 -0.05 -1.23 2.24

Period 7 0.10 0.75 2.96

Period 8 0.40 -1.59 3.02

Period 9 1.50 0.47 3.54

Period 10 2.20 2.74 3.75

Discuss the tracking signals for each product and what the implications are.

Reference no: EM132156444

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