Table 7.

Table 7.1 Quarterly Demand for Tahoe Salt

Period Demand
Year, Qtr t Dt
00,2 1 8,000
00,3 2 13,000
00,4 3 23,000
01,1 4 34,000
01,2 5 10,000
01,3 6 18,000
01,4 7 23,000
02,1 8 38,000
02,2 9 12,000
02,3 10 13,000
02,4 11 32,000
03,1 12 41,000

Figure 7.1 Quarterly Demand at Tahoe Salt

45,000
40,000
35,000
30,000
Demand

25,000
20,000
15,000
10,000
5,000
0
00,2 00,3 00,4 01,1 01,2 01,3 01,4 02,1 02,2 02,3 02,4 03,1
Year, Quarter
 Figure7.2

Figure 7.2 Deseasonalized Demand for Tahoe Salt

Period Demand Deseasonalized
t Dt Demand
1 8,000
2 13,000
3 23,000 19,750
4 34,000 20,625
5 10,000 21,250
6 18,000 21,750
7 23,000 22,500
8 38,000 22,125
9 12,000 22,625
10 13,000 24,125
11 32,000
12 41,000

Equation 7.2 Deseasonalizing Demand

where:
D = Demand
p = periodicity
t = period

Figure 7.3 Deseasonalized Demand for Tahoe Salt

45,000
Demand

40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
0 2 4 6 8 10 12 14

Period, t
 Sheet1

REGRESSION SUMMARY OUTPUT

Regression Statistics
Multiple R 0.958065237
R Square 0.917888998
Adjusted R Sq 0.90420383
Standard Error 414.5033124
Observations 8

ANOVA
df SS MS F Significance F
Regression 1 11523809.524 11523810 67.07182 0.0001786086
Residual 6 1030877.9762 171813
Total 7 12554687.5

Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 18,439 440.80870788 41.82991 1.25E-08 17360.367255 19517.609 17360.3673 19517.60894
X Variable 1 524 63.959249681 8.189738 0.000179 367.30676332 680.31228 367.306763 680.3122843

Initial Level, L
Trend, T
 Figure7.4

Historical Data Deseasonaliz

ed
Demand
Demand (Eqn 7.4)
Period
t Dt D
t
Seasonal Factor Estimate S
(Eqn 7.5) tS (Eqn 7.6) i Forecast
1 8,000 18,963 0.42 0.47 8,913
2 13,000 19,487 0.67 0.68 13,251
3 23,000 20,011 1.15 1.17 23,413
4 34,000 20,535 1.66 1.67 34,293
5 10,000 21,059 0.47 9,898
6 18,000 21,583 0.83 14,676
7 23,000 22,107 1.04 25,865
8 38,000 22,631 1.68 37,794
9 12,000 23,155 0.52 10,883
10 13,000 23,679 0.55 16,102
11 32,000 24,203 1.32 28,318
12 41,000 24,727 1.66 41,294

Forecasted Data 45,000

Forecasted 40,000
Period Demand
Year, Qtr t Ft+1 35,000
03,2 13 11,868 30,000
03,3 14 17,527 Demand
03,4 15 30,770 25,000 Dt
04,1 16 44,794 20,000 Deseasonalize
Demand
15,000 (Eqn 7.4)
10,000
5,000
0
1 2 3 4 5 6 7 8 9 10 11 12
 Figure7.5

Tahoe Salt Forecasts Using Four-Period Moving Average

Absolute Mean Squared
Period Demand Level Forecast Error Error Error
t Dt Lt Ft Et At MSEt MADt % Error MAPEt TSt
1 8,000
2 13,000
3 23,000
4 34,000 19,500
5 10,000 20,000 19,500 9,500 9,500 90,250,000 9,500 95 95 1.00
6 18,000 21,250 20,000 2,000 2,000 47,125,000 5,750 11 53 2.00
7 23,000 21,250 21,250 -1,750 1,750 32,437,500 4,417 8 38 2.21
8 38,000 22,250 21,250 -16,750 16,750 94,468,750 7,500 44 39 -0.93
9 12,000 22,750 22,250 10,250 10,250 96,587,500 8,050 85 49 0.40
10 13,000 21,500 22,750 9,750 9,750 96,333,333 8,333 75 53 1.56
11 32,000 23,750 21,500 -10,500 10,500 98,321,429 8,643 33 50 0.29
12 41,000 24,500 23,750 -17,250 17,250 123,226,563 9,719 42 49 -1.52
13 24,500
14 24,500
15 24,500
16 24,500

45,000
40,000
35,000
30,000
25,000 Demand
Dt
20,000
Forecast
15,000 Ft
10,000
5,000
0
0 2 4 6 8 10 12 14
 Figure7.6

Tahoe Salt Forecasts Using Simple Exponential Smoothing

Demand Forecast Absolute Error Mean Squared Error
Period t Dt Level Lt Ft Error Et At MSEt MADt % Error MAPEt TSt
0 22,083
1 8,000 20,675 22,083 14,083 14,083 198,340,278 14,083 176 176 1.00
2 13,000 19,908 20,675 7,675 7,675 128,622,951 10,879 59 118 2.00
3 23,000 20,217 19,908 -3,093 3,093 88,936,486 8,284 13 83 2.25
4 34,000 21,595 20,217 -13,783 13,783 114,196,860 9,659 41 72 0.51
5 10,000 20,436 21,595 11,595 11,595 118,246,641 10,046 116 81 1.64
6 18,000 20,192 20,436 2,436 2,436 99,527,532 8,777 14 70 2.15
7 23,000 20,473 20,192 -2,808 2,808 86,435,714 7,925 12 62 2.03
8 38,000 22,226 20,473 -17,527 17,527 114,031,550 9,125 46 60 -0.16
9 12,000 21,203 22,226 10,226 10,226 112,979,315 9,247 85 62 0.95
10 13,000 20,383 21,203 8,203 8,203 108,410,265 9,143 63 63 1.86
11 32,000 21,544 20,383 -11,617 11,617 110,824,074 9,368 36 60 0.58
12 41,000 23,490 21,544 -19,456 19,456 133,132,065 10,208 47 59 -1.38
23,490 11,538 12761
23,490
23,490
23,490

alpha 0.1
45,000
40,000
35,000
30,000
25,000
Demand
20,000
Forecast
15,000
10,000
5,000
0
1 2 3 4 5 6 7 8 9 10 11 12
 Figure7.7

Forecasts Using Trend-Corrected Exponential Smoothing (Holt's Model)

Demand Trend Forecast Absolute Error
Period t Dt Level Lt Tt Ft Error Et At Mean Squared Error MSEt MADt % Error MAPEt TSt
0 12,015 1,549
1 8,000 13,008 1,438 13,564 5,564 5,564 30,958,096 5,564 70 70 1
2 13,000 14,301 1,409 14,445 1,445 1,445 16,523,523 3,505 11 40 2
3 23,000 16,439 1,555 15,710 -7,290 7,290 28,732,318 4,767 32 37 0
4 34,000 19,594 1,875 17,993 -16,007 16,007 85,603,146 7,577 47 39.86 -2.15
5 10,000 20,322 1,645 21,469 11,469 11,469 94,788,701 8,355 115 54.83 -0.58
6 18,000 21,570 1,566 21,967 3,967 3,967 81,613,705 7,624 22 49.36 -0.11
7 23,000 23,123 1,563 23,137 137 137 69,957,267 6,554 1 42.39 -0.11
8 38,000 26,018 1,830 24,686 -13,314 13,314 83,369,836 7,399 35 41.48 -1.90
9 12,000 26,262 1,513 27,847 15,847 15,847 102,010,079 8,338 132 51.54 0.22
10 13,000 26,298 1,217 27,775 14,775 14,775 113,639,348 8,981 114 57.75 1.85
11 32,000 27,963 1,307 27,515 -4,485 4,485 105,137,395 8,573 14 53.78 1.41
12 41,000 30,443 1,541 29,270 -11,730 11,730 107,841,864 8,836 29 51.68 0.04
31,985
33,526
35,067
36,609
alpha 0.1
Beta 0.2
45,000
40,000
35,000
30,000
25,000
Demand
20,000
Forecast
15,000
10,000
5,000
0
1 2 3 4 5 6 7 8 9 10 11 12
 hlts-regr

HOLT'S MODEL REGRESSION SUMMARY OUTPUT

Regression Statistics
Multiple R 0.4813272
R Square 0.23167587
Adjusted R 0.15484346
Standard E 10666.8834
Observatio 12

ANOVA
df SS MS F Significance F
Regression 1 343092657.343 343092657.3 3.01534 0.113127
Residual 10 1137824009.32 113782400.9
Total 11 1480916666.67

Coefficients Standard Error t Stat P-value Lower 95% Upper 95%Lower 95.0%
Upper 95.0%
Intercept 12,015 6565.01289356 1.830179424 0.097147 -2612.611 26642.91 -2612.611 26642.91
X Variable 1,549 892.009599389 1.73647352 0.113127 -438.5705 3536.473 -438.5705 3536.473

b, estimate of demand
and level at t=0

a, estimate of trend at
t=0
 deseasonalized

Forecasts Using Trend and Seasonality Corrected Exponential Smoothing)

Deseasonalizing Demand
Deseasonalized Deseasonalized
Period Demand Demand Demand Seasonal Factor Estimate
t Dt (Eqn 7.2) D t
(Eqn 7.3) D t (Eqn 7.5) St
S
(Eqn 7.6) i
1 8,000 18,963 0.42 0.47
2 13,000 19,487 0.67 0.68
3 23,000 19,750 20,010 1.15 1.17
4 34,000 20,625 20,534 1.66 1.66
5 10,000 21,250 21,058 0.47
6 18,000 21,750 21,582 0.83
7 23,000 22,500 22,106 1.04
8 38,000 22,125 22,629 1.68
9 12,000 22,625 23,153 0.52
10 13,000 24,125 23,677 0.55
11 32,000 24,201 1.32
12 41,000 24,725 1.66

45,000
40,000
35,000
30,000
25,000 Demand
20,000 Deseasonlized
15,000 Demand
10,000
5,000
0
1 2 3 4 5 6 7 8 9 10 11 12
 Sheet2

WINTER'S MODEL REGRESSION SUMMARY OUTPUT

Regression Statistics
Multiple R 0.9580652
R Square 0.917889
Adjusted R Squar 0.9042038
Standard Error 414.50331
Observations 8

ANOVA
df SS MS F Significance F
Regression 1 11523809.5 11523809.5 67.07182 0.000179
Residual 6 1030877.98 171812.996
Total 7 12554687.5

CoefficientsStandard Error t Stat P-value Lower 95% Upper 95%Lower 95.0%

Upper 95.0%
Intercept 18,439 440.808708 41.8299089 1.249E-08 17360.37 19517.61 17360.37 19517.61
X Variable 1 524 63.9592497 8.18973841 0.000179 367.3068 680.3123 367.3068 680.3123

initial estimate of
level

initial estimate of
trend
 Figure7.8

Forecasts Using Trend and Seasonality Corrected Exponential Smoothing)

Demand Seasonal Factor Forecast Absolute Error Mean Squared
Period t Dt Level Lt Trend Tt St Ft Error Et At Error MSEt MADt % Error MAPEt TSt
18,439 524
1 8,000 18,866 514 0.47 8,913 913 913 832,857 913 11 11.41 1.00
2 13,000 19,367 513 0.68 13,179 179 179 432,367 546 1 6.39 2.00
3 23,000 19,869 512 1.17 23,260 260 260 310,720 450 1 4.64 3.00
4 34,000 20,380 512 1.67 34,036 36 36 233,364 347 0 3.50 4.00
5 10,000 20,921 515 0.47 9,723 -277 277 202,036 333 3 3.36 3.34
6 18,000 21,689 540 0.68 14,558 -3,442 3,442 2,143,255 851 19 5.98 -2.74
7 23,000 22,102 527 1.17 25,981 2,981 2,981 3,106,508 1,155 13 6.98 0.56
8 38,000 22,636 528 1.67 37,787 -213 213 2,723,856 1,037 1 6.18 0.42
9 12,000 23,291 541 0.47 10,810 -1,190 1,190 2,578,653 1,054 10 6.59 -0.72
10 13,000 23,577 515 0.69 16,544 3,544 3,544 3,576,894 1,303 27 8.66 2.14
11 32,000 24,271 533 1.16 27,849 -4,151 4,151 4,818,258 1,562 13 9.05 -0.87
12 41,000 24,791 532 1.67 41,442 442 442 4,432,987 1,469 1 8.39 -0.63
13 0.47 11,940
14 0.68 17,579
15 1.17 30,930
16 1.67 44,928

alpha 0.05
Beta 0.1
50,000
Gamma 0.1 45,000
40,000
35,000
30,000
25,000 Demand
20,000 Forecast
15,000
10,000
5,000
0
1 2 3 4 5 6 7 8 9 10 11 12
Forecast Errors for Tahoe Salt Forecasting

TS Range
Forecasting Method MAD MAPE(%) Min Max
Four-period moving average 9,719 49 -1.52 2.21
Simple exponential smoothing 10,208 59 -1.38 2.25
Holt's model 8,836 52 -2.15 2.00
Winter's model 1,469 8 -2.74 4.00