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Ms. Winnie Lin's company sells computers. Monthly sales for a six-month period are as follows:

MONTH SALES

Jan 18,000
Feb 22,000
Mar 16,000
Apr 18,000
May 20,000
Jun 24,000

Compute the sales forecast for July using the following approaches:
(1) A four-month moving average;
(2) A weighted three-month moving average using .50 for June, .30 for May and .20 for April;
(3) A linear trend equation
(4) Exponential smoothing with ? (smoothing constant) equal to .40, assuming a February forecast of 18,000

1 Answer

5 votes

Final answer:

To forecast sales for July in Ms. Winnie Lin's company, you can use a four-month moving average, a weighted three-month moving average, a linear trend equation, or exponential smoothing. The forecasts using these methods are approximately 19,500, 22,800, 30,600, and 19,200, respectively.

Step-by-step explanation:

To forecast sales for July using a four-month moving average, you would take the average of the sales from the previous four months (March to June) and use that as the forecast for July. It would be calculated as follows: (16,000 + 18,000 + 20,000 + 24,000) / 4 = 19,500.

To forecast sales for July using a weighted three-month moving average, you would assign weights to each of the previous three months' sales based on their importance. Then, multiply the sales for each month by their respective weights and sum them up. The forecast for July would be calculated as: (24,000 * 0.50) + (20,000 * 0.30) + (18,000 * 0.20) = 22,800.

To forecast sales for July using a linear trend equation, you would need to fit a line to the sales data and use that line to make the forecast. Based on the given data, the line equation would be y = 2,285.71x + 14,800. The forecast for July (x = 7) would be: y = 2,285.71 * 7 + 14,800 = 30,600.

To forecast sales for July using exponential smoothing with a smoothing constant of 0.40, you would start with the February forecast of 18,000. Then, for each subsequent month, you would calculate the forecast as: forecast = previous forecast + 0.40 * (actual sales - previous forecast). The forecast for July would be:

July forecast = 18,000 + 0.40 * (24,000 - 18,000) = 19,200.

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