Homework Solution Weighted Averages - Exponential Smoothing - Trend

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Presentation transcript:

Homework Solution Weighted Averages - Exponential Smoothing - Trend MGMT E-5070 Homework Solution Weighted Averages - Exponential Smoothing - Trend Cool-Man Air Conditioners TM Manual Computer-Based Part A

Cool-Man Air Conditioners Sales of Cool-Man air conditioners have grown steadily over the past five years: Year Sales 1st 450 2nd 495 3rd 518 4th 563 5th 584 6th ?

Cool-Man Air Conditioners REQUIREMENT: The sales manager had predicted, before the business started, that year 1’s sales would be 410 units. Using exponential smoothing with a weight of α = 0.30, develop forecasts for years 2 through 6 .

Cool-Man Air Conditioner Exponential Smoothing 2nd Year 1st Year 1st Year 1st Year Forecast = Forecast + α ( Actual - Forecast ) = 410 units + 0.30 ( 450 units - 410 units ) = 410 units + 0.30 ( 40 units ) = 410 units + 12 units = 422 units

Cool-Man Air Conditioner Exponential Smoothing 3rd Year 2nd Year 2nd Year 2nd Year Forecast = Forecast + α ( Actual - Forecast ) = 422 units + 0.30 ( 495 units - 422 units ) = 422 units + 0.30 ( 73 ) = 422 units + 21.9 units = 443.9 units

Cool-Man Air Conditioner Exponential Smoothing 4th Year 3rd Year 3rd Year 3rd Year Forecast = Forecast + α ( Actual - Forecast ) = 443.9 units + 0.30 ( 518 units - 443.9 units ) = 443.9 units + 0.30 ( 74.1 ) = 443.9 units + 22.23 units = 466.13 units

Cool-Man Air Conditioner Exponential Smoothing 5th Year 4th Year 4th Year 4th Year Forecast = Forecast + α ( Actual - Forecast ) = 466.13 units + 0.30 ( 563 units - 466.13 units ) = 466.13 units + 0.30 ( 96.87 ) = 466.13 units + 29.06 units = 495.19 units

Cool-Man Air Conditioner Exponential Smoothing 6th Year 5th Year 5th Year 5th Year Forecast = Forecast + α ( Actual - Forecast ) = 495.19 units + 0.30 ( 584 units - 495.19 units ) = 495.19 units + 0.30 ( 88.8 ) = 495.19 units + 26.64 units = 521.83 units

Cool-Man Air Conditioners REQUIREMENT: Using the smoothing coefficients of 0.60 and 0.90, develop forecasts for the sales of Cool- Man air conditioners.

Cool-Man Air Conditioners Smoothing coefficient ( α ) = 0.60 Year Sales Forecast 1st 450 - 2nd 495 434 3rd 518 470.6 4th 563 499.0 5th 584 537.4 6th ? 565.6

Cool-Man Air Conditioners Smoothing coefficient ( α ) = 0.90 Year Sales Forecast 1st 450 - 2nd 495 446 3rd 518 490.10 4th 563 515.21 5th 584 558.20 6th ? 581.40

Homework Solution Weighted Averages - Exponential Smoothing - Trend Cool-Man Air Conditioners TM Manual Computer-Based Part A