**Problem solve**

**Problem 2**

A specific forecasting model was used to forecast demands for a product. The fore a t and the corresponding demands that subsequently occurred are shown below.

Use the MAD and tracking signal technique to evaluate the forecasting model.

**Solution**

Evaluate the forecasting model using MAD, MAPE, and Jacking signal.

Forecast model is well within the distribution.

1. Demand for stereo headphones and CD players for joggers has caused Nina Industries to experience a growth of almost 50 percent over the past year. The number of jogger is continuing to expand, so ina expects demand for headsets to also expand.

Demands for the stereo units for last year were as follows:

a. Using least squares regression analysis, what would you estimate demand to be for each month nextyear? Follow the general format in Exhibit 9.14.

b. To be reasonably confident of meeting demand, Nina decides to use three standard errors of estimate for safety, How many additional units should be held to meet this level of confidence?

2.Following are the actual tabulated demands for an item for a nine-month period, from

January through September. Your supervisor wants to test two forecasting methods to

see which method was better over this period.

a. Forecast April. through September using a three-month simple moving average.

b. Use simple exponential smoothing to estimate April through September. (Use a = .3 and assume that the forecast for March was 130.)

c. Use MAD to decide which method produced the better forecast over the six-month period.

3.A forecasting method you have been using to predict product demand is shown in the following table along with the actual demand that occurred.

a. Compute the tracking signal using the MAD ana running urn of forecast errors (RSFE).

b. Calculate the MAPE.

c. Comment on whether you feel the forecasting method is giving good predictions.

4.Josh Francis recently has been named Director of Marketing for a consumer products company. The company has divided up the United States into different territories, with a sales manager assigned to each territory. The sales and populations for the current territories in which her firm now does business are as follows:

a. Using an electronic spreadsheet, calculate the least squares regression line that tits the above data.

b. What is the regression equation? What is the coefficient of determination?

c. Josh’s company is planning to expand into two additional territories in the coming year. The populations of these two territories are 7.43 million and 3.87 million. What are the estimated sales that Josh. can expect from these two territories?

5.Chez Alex i a haute cuisine restaurant that is only open tor dinner. In order to determine the proper number of wait stuff to schedule for each meal. A-pen Wang. the dining room manager needs to forecast the number of meals that will be served. To do this she has collected the following data:

a. Use exponential smoothing with a = .4 and a = .8 to forecast the number of calls for next Monday.

b. Using Map as a criterion, which of the two values of a do you recommend?

c. Construct a table to calculate the average MAD for values of a = .1, .2, .3, … , .9. Which value of a do you recommend be used?