Carpet City

Month
1
2
3
4
5
6
7
8
9

Demand for Soft Shag Carpet (1,000

yd.)
9
8
7
8
10
11
13
12

Compute MAD on 3 mos moving average

Month
1
2
3
4
5
6
7
8
9

Demand for Soft Shag Carpet (1,000

yd.)
9
8
7
8
10
11
13
12

Compute MAD on weighted 3 mos moving average

Which is a better forecast method?

3 mos moving
average forecast
---------8.00
7.67
8.33
9.67
11.33
12.00

Error
---------0.00
2.33
2.67
3.33
0.67
----

|Error|
---------0.00
2.33
2.67
3.33
0.67
----

1.8
Weighted 3 mos
moving average
forecast
---------7.7
7.7
8.8
10.1
11.8

Error
---------0.3
2.3
2.2
2.9
0.2
----

|Error|
---------0.3
2.3
2.2
2.9
0.2
----

1.58
Weighted Moving Average is good according to above calculation

Petroco Service Station

alpha =
0.3
Month
October
November
December
January
February
March
April
May
June
July
August

Gas Demand
800
725
600
500
625
690
810
935
1200
1100

1-alphs =
0.7
Exp Forecast
800.00
800.00
777.50
724.25
656.98
647.38
660.17
705.12
774.08
901.86
961.30

Sum of abs(Error) 1555.12

Sum of Demands 7185
21.64%
MAPD

Error
----75.00
-177.50
-224.25
-31.98
42.62
149.83
229.88
425.92
198.14

abs(Error)
---75.00
177.50
224.25
31.98
42.62
149.83
229.88
425.92
198.14

Science and Technology Mutual Fund

alpha =
0.4
Month

Fund Price

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21

57 3/4
54 1/4
55 1/8
58 1/8
53 3/8
51 1/8
56 1/4
59 5/8
62 1/4
59 1/4
62 3/8
58
58 1/8
62 3/4
64 3/4
66 1/8
68 3/4
65 1/2
69 7/8
70 1/4

3 mos moving
average forecast
---------55 5/7
55 5/6
55 5/9
54 1/5
53 4/7
55 2/3
59 3/8
60 3/8
61 2/7
59 7/8
59 1/2
59 5/8
61 7/8
64 5/9
66 5/9
66 4/5
68
68 5/9

abs(Error)
---------2.42
2.46
4.42
2.04
6.04
6.58
0.13
2.00
3.29
1.75
3.25
5.13
4.25
4.21
1.04
3.08
2.21
----

a.

Compute MAD on 3 mos moving average

b.

Compute MAD on weighted 3 mos moving average

c.

Compute MAD on exponentially smoothed forecast

d.

Which is a better forecast method?

Weighted 3 mos
moving average
forecast
---------55 1/8
56 5/6
55
52 1/2
54 3/7
57 3/4
60 6/7
60 1/5
61 3/7
59 4/9
58 1/2
60 8/9
63 1/2
65 3/8
67 5/9
66 5/9
68 4/9
69 2/3

1-alpha =
0.6
abs(Error)
---------3
3 4/9
3 6/7
3 3/4
5 1/5
4 1/2
1 5/8
2 1/5
3 3/7
1 1/3
4 1/4
3 6/7
2 5/8
3 3/8
2 1/9
3 1/3
1 4/5
----

57
57
56
55
56
55
53
54
56
58
59
60
59
58
60
62
63
65
65
67
68

Exp Forecast
3/4
3/4
1/3
6/7
7/9
2/5
5/7
5/7
2/3
8/9
3/8
3/7
8/9
4/9
1/6
3/4
3/4
2/3
1/3
1/2

abs(Error)
---3 1/2
1 2/9
2 1/4
3 2/5
4 2/7
2 5/9
4 8/9
5 4/7
1/3
3 1/3
2 3/8
1 2/7
3 5/6
4 2/7
4
5
1/4
4 2/9
2 8/9
----

3.19
3.15
3.13

Exponentially Smoothed forcast has good result than other option. It should be suggestable model for

Err:512
57 3/4

ld be suggestable model for above problem

Carpet City Regression

Independent
variable x

Dependent variable
y

Monthly
Construction
Permits

Monthly Carpet
Sales (1,000 yd.)

17
25
8
7
14
7
45
19
28
28

9
14
10
12
15
9
24
21
20
29

Regression Equatio
Regression Equatio
y=a+bx

If 30 construction p
What is expected c

Correlation Coeffici

egression Equation Slope

egression Equation Intercept

f 30 construction permits were issued

What is expected carpet sales (1000 yds)?

orrelation Coefficient

0.43
7.75

20.70
0.75

Gilley's Ice Cream Parlor

Week
1
2
3
4
5
6
7
8
9
10
11
12
13
14

Ave. Temp
(degrees)
68
70
73
79
77
82
85
90
85
92
90
95
80
75

Ice cream Sold

(gal.)
80
115
91
87
110
128
164
178
144
179
144
197
144
123

Regression equation

Regression equation

Correlation Coefficie

Coefficient of Deter

If average 85 deg w
What is expected ic
Equation

Problem 6
Coefficient of Determination
In the above problem, Coffecient of determination is .78. It means 78% data of x and y are

egression equation slope

3.82

egression equation intercept

-176.89

orrelation Coefficient

0.88

oefficient of Determination

0.78

f average 85 deg weekly daytime temperature

147.95
What is expected ice cream sold?
y=a+bx

% data of x and y are in liner regression