Concept explainers
National Scan, Inc., sells radio frequency inventory tags. Monthly sales for a seven-month period were as follows:
Month | Sales (000 units) |
Feb. | 19 |
Mar. | 18 |
Apr. | 15 |
May | 20 |
Jun. | 18 |
Jul. | 22 |
Aug. | 20 |
a. Plot the monthly data on a sheet of graph paper.
b.
(1) The naive approach
(2) A five month moving average
(3) A weighted average using .60 for August, .30 for July, and .10 for June
(4) Exponential smoothing with a smoothing constant equal to .20, assuming a a March forecast of 19(000)
(5) A linear trend equation
c. Which method seems least appropriate Why? (Hint: Refer to your plot from part a.)
d. What does use of the term sales rather than demand presume?
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