Reference no: EM132320566

Penz, Inc. is a pen manufacturer specializing in colored pens. Located in Denver, CO., Penz has grown successfully over the past few years because of the addition of a new general manager, Kim K. Selling red pens is a major portion of Penz' business, yet Kim was surprised at the lack of forecasts for pens for the company. Kim is determined to get a better idea of how many pens the company should produce with the least amount of excess stock or stockouts. Listed below is a summary of last year's red pen sales by month:

Month and Red pens sold:

January 2,200 February 1,900 March 1,500 April 1,200 May 1,000 June 400 July 700 August 2,275 September 2,300 October 1,706 November 1,410 December 735 TOTAL: 17,326 

Assignment: Kim has hired you to determine the best technique for forecasting Penz, Inc. demand of red pens based on the given data.

1. For each letter, calculate the forecasts, along with Forecast Error, Bias, Bias Average, Absolute Deviation and Absolute Deviation Average, according to the following methods. Calculate for all months possible.

a. 4- period Simple Moving Average (SMA)

b. 4-period Weighted Moving Average (WMA) with weights as follows:

.10 = most recent period

.10 = 2nd most recent period

.30 = 3rd most recent period

.50 = 4th most recent period

c. Exponential Smoothing, alpha = 0.3 (assume 1,110 for January's forecast)

d. Exponential Smoothing, alpha = 0.5 (assume 1,110 for January's forecast) e. Exponential Smoothing, alpha = 0.9 (assume 1,110 for January's forecast)