Problem 3-2

National Scan, Inc., sells radio frequency inventory tags. Monthly sales for a seven-month
period were as follows:

Month
Sales
(000)Units
Feb. 15
Mar. 20
Apr. 14
May. 24
Jun. 18
Jul. 20
Aug. 30


b. Forecast September sales volume using each of the following:

(1) A linear trend equation.(Round your intermediate calculations and final answer to 2
decimal places.)

Y
t
27.14 thousands

(2) A five-month moving average. (Round your answer to 2 decimal places.)

Moving average 21.20 thousands

(3) Exponential smoothing with a smoothing constant equal to .40, assuming a March
forecast of 17(000). (Round your intermediate calculations and final answer to 2
decimal places.)

Forecast 23.61 thousands

(4) The naive approach.

Naive approach 30 \ thousands

(5) A weighted average using .60 for August, .10 for July, and .30 for Jun e. (Round
your answer to 2 decimal places.)

Weighted
average
25.40 thousands

rev: 03_15_2012, 05_23_2013_QC_30974
Explanation:
b.
(1)
t y ty
1 15 15
2 20 40
3 14 42
4 24 96
5 18 90
6 20 120
7 30 210

28 141 613








with n = 7, t = 28, t
2
= 140

b =
nty ty
=
7(613) 28(141)
= 1.75
nt
2
(t)
2
7(140) 28(28)

a =
y bt
=
141 1.75(28)
= 13.14
n 7

For Sept., t = 8, and Y
t
= 13.14 + 1.75(8) = 27.14
(000)

(2)
MA
5
=
14 + 24 + 18 + 20 + 30
= 21.20
5

(3)
Month Forecast = F( old ) +
.40[Actual F(Old)]

April 18.20 = 17.00 + .40 [20 17.00]
May 16.52 = 18.20 + .40 [14 18.20]
June 19.51 = 16.52 + .40 [24 16.52]
July 18.91 = 19.51 + .40 [18 19.51]
August 19.35 = 18.91 + .40 [20 18.91]
September 23.61 = 19.35 + .40 [30 19.35]


(5)
.60(30) + .10(20) + .30(18) = 25.40
Problem 3-7
Freight car loadings over an 18-week period at a busy port are as follows:

Week Number Week Number Week Number
1 220 7 350 13 461
2 245 8 360 14 475
3 277 9 404 15 502
4 275 10 380 16 510
5 340 11 441 17 543
6 310 12 450 18 541


a. Determine a linear trend line for expected freight car loadings. (Round your
intermediate calculations and final answers to 3 decimal places.)

= 212.732 + 19.034 t

b. Use the trend equation to predict expected loadings for weeks 22 and 23. (Round your
intermediate calculations and final answers to 3 decimal places.)

The forecasted demand for week 22 and 23 is 631.481 and 650.515 respectively.

c. The manager intends to install new equipment when the volume exceeds 829 loadings
per week. Assuming the current trend continues, the loading volume will reach that
level in approximately how many more weeks? (Round your intermediate calculations
to 3 decimal places and final answer to the nearest whole number.)

It would take approximately 15 more weeks.

rev: 02_25_2012, 03_15_2012, 01_31_2013_QC_25862, 09_05_2013_QC_34423
Explanation:
a.
t y t*y t
2

1 220 220 1
2 245 490 4
3 277 831 9
4 275 1,100 16
5 340 1,700 25
6 310 1,860 36
7 350 2,450 49
8 360 2,880 64
9 404 3,636 81
10 380 3,800 100
11 441 4,851 121
12 450 5,400 144
13 461 5,993 169
14 475 6,650 196
15 502 7,530 225
16 510 8,160 256
17 543 9,231 289
18 541 9,738 324

171 7,084 76,520 2109










t
i
=171 y
i
= 7,084
t
i
2
= 2109 t
i
y
i
=76,520

b =
(n)(t
i
y
i
) (t
i
)(y
i
)
(n)(t
i
2
) (t
i
)
2


b =
(18)(76,520) (171)(7,084)
=
165,996
= 19.034
(18)(2109) (171)
2
8,721

a =
y bt
or
n
a =
7,084 19.034(171)

18

a =
3,829.186
=
212.733

18


b.
F =212.733 +(19.034)(22) = 631.481
F =212.733 +(19.034)(23) = 650.515

The forecasted demand for week 22 and 23 is 631.481 and 650.515 respectively.

c.
829 541
= 15.13 Weeks
19.034

It would take approximately 15 more weeks. Since we have just completed week 18, the
loading volume is expected to reach 829 by week 33 (18 + 15).
Problem 3-13
The manager of a fashionable restaurant open Wednesday through Saturday says that the
restaurant does about 35 percent of its business on Friday night, 35 percent on Saturday
night, and 18 percent on Thursday night. What seasonal relatives would describe this
situation?(Round your answers to 2 decimal places.)


Wednesday 0.48
Thursday 0.72
Friday 1.40
Saturday 1.40


Explanation:

Wednesday = .12 4 = .48
Thursday = .18 4 = .72
Friday = .35 4 = 1.40
Saturday = .35 4 = 1.40


rev: 03_15_2012
Problem 3-20
An analyst must decide between two different forecasting techniques for weekly sales of
roller blades: a linear trend equation and the naive approach. The linear trend equation is
F
t
= 124 + 2.1t, and it was developed using data from periods 1 through 10. Based on data
for periods 11 through 20 as shown in the table, which of these two methods has the
greater accuracy if MAD and MSE are used? (Round your answers to 2 decimal places.)

t Units Sold
11 144
12 146
13 152
14 142
15 152
16 149
17 152
18 154
19 157
20 164



MAD (Naive) 5.11
MAD
(Linear)
5.47
MSE (Naive) 22.97
MSE (Linear) 40.83


Naive method provides forecasts with less average error and less average squared
error.

rev: 03_15_2012, 01_04_2013