Question

Assume that your stock of sales merchandise is maintained based on the forecast demand. If the distributor's sales personnel call on the first day of each month, compute your forecast sales by each of the three methods requested here. ACTUAL June 145 July 185 August 215

Answer 1

To compute the forecast sales, we can use three methods: moving average, weighted moving average, and exponential smoothing.

Step-by-step explanation:

Based on the given information, the stock of sales merchandise is maintained based on the forecast demand. To compute the forecast sales, we can use three methods: moving average, weighted moving average, and exponential smoothing.

Moving Average:

To compute the forecast sales using the moving average method, we take the average of the actual sales for the past three months. So, the forecast sales for September would be (145 + 185 + 215) / 3 = 181.67

Weighted Moving Average:

To compute the forecast sales using the weighted moving average method, we assign different weights to each actual sales value. Let's say we assign weights of 0.3, 0.4, and 0.3 to June, July, and August sales respectively. The forecast sales for September would be (0.3 * 145) + (0.4 * 185) + (0.3 * 215) = 180.5

Exponential Smoothing:

To compute the forecast sales using the exponential smoothing method, we use a smoothing constant (alpha) and the previous forecasted sales. Let's say we choose an alpha value of 0.3. The forecast sales for September would be 0.3 * August forecasted sales + (1 - 0.3) * August actual sales = 0.3 * 215 + 0.7 * 215 = 215