4. Forecasts based on averages. Given the following data: Number of Period Complaints 1 60 2 65 3 55 4 58 5 64 Prepare a forecast for period 6 using each of these approaches: The appropriate naive approach. A three-period moving average. A weighted average using weights of .50 (most recent), .30, and .20. Exponential smoothing with a smoothing constant of .40. PAO Saping seasonal relatives. Apple’s Citrus Fruit Farm ships boxed fruit to anywhere in the world. Using the following information, a manager wants to forecast shipments for the first four months of next year. Seasonal Seasonal Month Relative Month Relative Jan. 1.2 Jul. 08 Feb. 1.3 Aug. 0.6 Mar. 13 Sep. 07 Apr. 11 Oct. 1.0 May. 08 Nov. 1 Jun. 0.7 Dec. 14 The monthly forecast equation being used is: F,= 402 + 3t where to = January of last year F, = Forecast of shipments for month tinear trend line, Plot the data on a graph, and verify visually that a linear trend line is appropriate. Develop a linear trend equation for the following data. Then, use the equation to predict the next two values of the series. Period Demand 1 44 52 50 54 55 55 60 56 62 CaHYF HAWN§ seasonal relatives. Obtain estimates of quarter relatives for these data using the centered moving average method: Quarter: 1 2 3 4 1 2 3 4 1 2 3 4 1 Demand: 14 18 35 46 28 #36 #60 #71 45 54 84 88 58SrRegression line. A large Midwestern retailer has developed a graph that summarizes the effect of adver- tising expenditures on sales volume. Using the graph, determine an equation of the form y = a + bx that describes this relationship. Sales ($ millions) 1 1 1 1 1 2 4 6 8 10 x Advertising ($ thousands)& Regression analysis. The owner of a small hardware store has noted a sales pattern for window locks that seems to parallel the number of break-ins reported each week in the newspaper. The data are: Sales: 46 18 20 22 27 34 14 37 30 Break-ins: 9 3 3 5 4 7 2 6 4 a, Plot the data to determine which type of equation, linear or nonlinear, is appropriate. b. Obtain a regression equation for the data. c. Estimate average sales when the number of break-ins is five.Accuracy of forecasts. The manager of a large manufacturer of industrial pumps must choose between two alternative forecasting techniques. Both techniques have been used to prepare forecasts for a six- month period. Using MAD as a criterion, which technique has the better performance record? FORECAST Month Demand __Technique1_‘Technique 2 “4 492 48H 2 470 484 482 3 485 480 478 4 493 490 488 5 498 497 492 6 492 493 493 Check that each forecast has an average error of approximately zero. (See computations that follow.)8 control chart. Given the demand data that follow, prepare a naive forecast for periods 2 through 10. Then, determine each forecast error, and use those values to obtain 2s control limits. If demand in the next two periods turns out to be 125 and 130, can you conclude that the forecasts are in control? Period: 1 2 a 4 5 6 7 8 9 10 Demand: 118 117 120 119 126 122 117° «123121124