Forecast

Sales of a reversible electric drill over the last eight months are given in the following table:

Month 1 2 3 4 5 6 7 8
Sales (units) 42 43 40 44 50 47 53 49

Forecast sales of the drill in month 9 using the following methods:
a. A naive forecast.
b. A five-period simple moving average.
c. A three-period weighted moving average using weights of 0.7 for the most recent, 0.2 for the second most recent, and 0.1 for the third most recent observation.
d. An exponential smoothing forecast using = 0.3. The exponential smoothing forecast for month 8 is 51.4 units.

This solution is comprised of detailed step-by-step calculation of the given problem in EXCEL and provides students with a clear perspective of the underlying concepts.