# Compute the MSE, the MAD, the MAPE, and the RSFE and the tracking signal for each forecasting method

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

1. Plot the monthly data on a sheet of graph paper or plot on excel
2. 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 a (smoothing constant) equal to .40, assuming a February forecast of 18,000
3. Which method is the least appropriate? Why?

4. The forecasts generated by two forecasting methods and actual sales are as follows:

Month                  Sales                      Forecast 1                           Forecast 2

1                              269                         275                                         268

2                              289                         266                                         287

3                              294                         290                                         292

4                              278                         284                                         298

5                              268                         270                                         274

6                              269                         268                                         270

7                              260                         261                                         259

8                              275                         271                                         275

Compute the MSE, the MAD, the MAPE, and the RSFE and the tracking signal for each forecasting method. Which method is better? Why?

1. Given the following production plan, use a (a) chase production strategy and (b) level production strategy to compute the monthly production, ending inventory/(backlog) and workforce levels. A worker can produce 50 units per month. Assume that the beginning inventory in January is 500 units, and the firm desires to have 200 of the inventory at the end of June.

Month                  Jan                         Feb                        Mar                        Apr                         May                       Jun

Demand           2000                       3000                       5000                     6000                       6000                     2000

Production

Ending Inventory

Workforce

1. Given the following production schedule, compute the available-to-promise quantities.

Week                                              1              2              3              4              5              6              7              8

Model B

MPS       BI=20                             20           0              20           20           0              20           20             20

Committed customer orders10            10           10           10           10           0              0               10

ATP:D

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