Forecasting for National Flights Since, the demand for national flights is stable, there are 4 methods that

can be used to forecast the demand for the 4th year. Nave method forecasting for National Flights: According to nave method, the forecast for the demand of the next period is equal to the forecast of the previous period. Therefore, the demand forecast for period 13, in the 4th year = 9540. After calculating the forecasted values, we calculated the forecast error, to find the Mean Absolute Deviation. Using the nave method the MAD = 638.6363636 Moving Averages forecasting for National Flights: Moving averages forecast method uses an average of the n most recent periods to help forecast demand for the next period. Formula used: Sum of actual demand for n periods/ n Parameters used: For a more accurate calculation of the MAD, we used two different k values of 3 and 4 to help forecast the demand for the 4th year. The reason why we used a k value of 3 is because demand is stable and so the average of the 3 most recent periods would give the most accurate forecast. Additionally, we used a k value of 4 because the year is divided into 4 periods for every quarter, and the average of 4 most recent periods would help give more accurate forecasts. After calculating the forecasted values, we calculated the forecast error, to find the Mean Absolute Deviation. Using the Moving Averages forecast, with k=3 MAD = 335.1481481 Using the Moving Averages forecast, with k=4 MAD = 263.8636364 The lowest MAD gives the more accurate forecast, therefore the Moving Averages with k = 4 is a better forecast, than k = 3.

Weighted Moving Averages forecasting for National Flights: Weighted moving averages is a forecasting technique which is more responsive to changes, as it assigns weights to each of the previous methods. Formula used: Weighted moving average = sigma (Weight for period n)(Demand in period n ) / sigma Weights Parameters used: For a more accurate calculation of the MAD, we used two different k values of 3 and 4 to help forecast the demand for the 4th year. The reason why we used a k value of 3 is because demand is stable and so the average of the 3 most recent periods would give the most accurate forecast. Additionally, we used a k value of 4 because the year is divided into 4 periods for every quarter, and the average of 4 most recent periods would help give more accurate forecasts. Weights applied: Last month = 3 2 months ago = 2 1 month ago = 1 We used these particular weights to keep our calculations simple. After calculating the forecasted values, we calculated the forecast error, to find the Mean Absolute Deviation. Using the Weighted Moving Averages forecast, with k=3 MAD = 465.28 Using the Weighted Moving Averages forecast, with k=4 MAD = 413.537037 The lowest MAD gives the more accurate forecast, therefore the Weighted Moving Averages with k = 4 is a better forecast, than k = 3. Exponential Smoothing forecasting for National Flights: Exponential smoothing is a weighted moving average forecasting technique in which data points are weighted by an exponential function. Formula used: New forecast = Last periods forecast + alpha (Last periods actual demand Last periods forecast) Parameters used: For a more accurate calculation of the MAD, we used two different smoothing (or weighting) constant values of 0.3 and 0.7 to help forecast the demand for the 4th year. We chose these particular smoothing constant values because usually the industry uses smoothing constants of < 0.5. So we chose a value of below 0.5 and above 0.5.

After calculating the forecasted values, we calculated the forecast error, to find the Mean Absolute Deviation. Using the Exponential smoothing forecast, with alpha = 0.3 MAD = 412.0783155 Using the Exponential smoothing forecast, with alpha = 0.7 MAD = 537.3084119 The lowest MAD gives the more accurate forecast, therefore the Exponential smoothing forecast with alpha = 0.3, which is a better forecast, than alpha = 0.7.