P1
Carpet City
Month Demand for Soft Shag Carpet (1,000 yd.) 3 mos moving average forecast Weighted 3 mos moving average forecast Error abs() Error abs()
1 10
2 9
3 8
4 9
5 10
6 12
7 14
8 11
9
Please apply weights stated in the problem Weights: 0.55 (most recent month), 0.35, 0.10
Compute MAD on 3 mos moving average Note: average over month 4 through 8 only. No data available to month 9
Compute MAD on weighted 3 mos moving average Note: average over month 4 through 8 only. No data available to month 9
Which is a better forecast method?
P2
Petroco Service Station
alpha = 0.4
Month Gas Demand Exp Forecast Error
October 775 —-
November 835
December 605
January 450
February 600
March 700
April 820
May 925
June 1500
July 1200
August
8410 SUM
MAPD
P3
Science and Technology Mutual Fund
alpha = 0.3
Month Fund Price 3 mos moving average forecast Weighted 3 mos moving average forecast Exp Forecast 3 mos MA error Weighted 3 mos MA error Exp. Smoothing error
1 55 3/4 —- —- —-
2 54 1/4 —- —-
3 55 1/8 —- —-
4 58 1/8
5 53 3/8
6 51 1/8
7 56 1/4
8 59 5/8
9 62 1/4
10 59 1/4
11 62 3/8
12 58
13 58 1/8
14 62 3/4
15 64 3/4
16 66 1/8
17 68 3/4
18 60 1/2
19 65 7/8
20 72 1/4
21
Please apply weights stated in the problem Weight 0.5 (most recent), 0.3, 0.2
Compute MAD on 3 mos moving average
Compute MAD on weighted 3 mos moving average
Compute MAD on exponentially smoothed forecast
Which is a better forecast method?
P4
Carpet City Regression
X – axis Y – axis
Monthly Construction Permits Monthly Carpet Sales (1,000 yd.)
17 9
25 14
8 10
7 12
14 15
7 9
45 24
19 21
28 20
28 29
Place regression output here
Y = A + Bx
A =
B =
Forecast Carpet sales for 30 construction permits
Correlation Coefficient
P5
Gilley’s Ice Cream Parlor
x y
Ave. Temp Ice cream Sold
Week (degrees) (gal.)
1 68 80
2 70 115
3 73 91
4 79 87
5 77 110
6 82 128
7 85 164
8 90 178
9 85 144
10 92 179
11 90 144
12 95 197
13 80 144
14 75 123
Place regression output here
(a) Y = A + Bx
A =
B =
(b) Correlation Coefficient
(c’) Coefficient of Determination
Explain the meaning of the coefficient of Determination below. What does it indicate?
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