Chapter 15, Problem 1P

a)

Summary Introduction

To determine: A 3-month moving average forecast for April through January.

Explanation of Solution

Given information:

Determine a 3-month moving average forecast for April through January:

Formulae to determine the value in the above table:

b)

Summary Introduction

To determine: A 5-month moving average forecast for June through January.

Explanation of Solution

Given information:

Determine a 5-month moving average forecast for June through January:

Formulae to determine the value in the above table:

c)

Summary Introduction

To determine: The two forecasts using MAD.

Explanation of Solution

Given information:

Compare two forecasts using MAD:

Formulae to determine the value in the above table:

According to the findings, the dealer should use 3-month forecasts, which has smaller MAD that indicates accurate forecast.