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Demand Forecasting for Bimbila Supplies

The operations manager was asked to forecast demand from February 2014 to March 2015 using three different forecasting methods: exponential smoothing, trend, and adjusted exponential smoothing. Exponential smoothing used an alpha of 0.5 to calculate forecasts. The trend method used a beta of 0.3 to calculate the trend and adjust forecasts. Adjusted exponential smoothing added the trend to the exponential smoothing forecast. The manager showed the calculations to arrive at the forecasted figures for each method to evaluate their strengths and weaknesses for forecasting future demand.

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17 views3 pages

Demand Forecasting for Bimbila Supplies

The operations manager was asked to forecast demand from February 2014 to March 2015 using three different forecasting methods: exponential smoothing, trend, and adjusted exponential smoothing. Exponential smoothing used an alpha of 0.5 to calculate forecasts. The trend method used a beta of 0.3 to calculate the trend and adjust forecasts. Adjusted exponential smoothing added the trend to the exponential smoothing forecast. The manager showed the calculations to arrive at the forecasted figures for each method to evaluate their strengths and weaknesses for forecasting future demand.

Uploaded by

sboaduappiah
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

QUESTION 2

1. The information below relates to the Bimbila Supplies Ltd. As the operations
manager of the firm you have been tasked to use the data below to forecast
demand from February 2014 to March 2015. State the strengths and
weaknesses of the methods used? Show how you arrived at the forecasted
figures. 15 Marks

Period

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Month

January
February
March
April
May
June
July
August
September
October
November
December
January
February
March

Deman
d

Exponentia
l
Smoothing

37
40
41
40
41
37
50
47
56
52
55
54
50
49
50

Forecast Ft+1

Trend
Tt+1

Adjusted =
0.30
Forecast AFt+1

37.00
37.00
38.50
39.75
39.88
40.44
38.72
44.36
45.68
50.84
51.42
53.21
53.60
51.80
50.40

ANSWER
Ft +1= Dt +(1 ) Ft
Ft +1=t h e forecast for t h e next period , Dt

= actual demand in the present period,

= 0.50
Ft

the previously
determined forecast for
present period;
F2 ==(0.50
x 37) + (1-0.50)37
F2the
= 37.00

smoothing
constant
F3 = (0.50
x 40)

+ (1-0.50)37

F3 = 38.50

F4 = (0.50 x 41) + (1-0.50)38.5

F4 = 39.75

F5 = (0.50 x 40) + (1-0.50)39.75

F5 = 39.88

F6 = (0.50 x 41) + (1-0.50)39.88

F6 = 40.44

F7 = (0.50 x 37) + (1-0.50)40.44

F7 = 38.72

F8 = (0.50 x 50) + (1-0.50)38.72

F8 = 44.36

F9 = (0.50 x 47) + (1-0.50)44.36

F9 = 45.68

F10 = (0.50 x 56) + (1-0.50)45.68 F10 = 50.84


F11 = (0.50 x 52) + (1-0.50)50.84 F11 = 51.42
F12 = (0.50 x 55) + (1-0.50)51.42 F12 = 53.21
F13 = (0.50 x 54) + (1-0.50)53.21 F13 = 53.60
F14 = (0.50 x 50) + (1-0.50)53.60 F14 = 51.80
F15 = (0.50 x 49) + (1-0.50)51.31 F15 = 50.40

To calculate the Adjusted Exponential Smoothing;


T t +1= (F t +1F t )+(1 )T t
T t =t h e last period ' s trend factor ;
T2
T3
T4
T5
T6
T7
T8
T9
T10
T11
T12
T13
T14
T15

= a smoothing constant for trend

= 0.3 (37.00 37.00) + (0.7)(0 )


= 0.3 (38.5 37.00) + (0.7)(0)
= 0.3 (39.75 38.5) + (0.7)(0.45)
= 0.3 (39.88 39.75) + (0.7)(0.69)
= 0.3 (40.44 39.88) + (0.7)(0.52)
= 0.3 (38.72 40.44) + (0.7)(0.53)
= 0.3 (44.36 38.72) + (0.7)(-0.14)
= 0.3 (45.68 44.36) + (0.7)(1.59)
= 0.3 (50.84 45.68) + (0.7)(1.51)
= 0.3 (51.42 50.84) + (0.7)(2.61)
= 0.3 (53.21 51.42) + (0.7)(2.00)
= 0.3 (53.60 53.21) + (0.7)(1.94)
= 0.3 (51.80 53.60) + (0.7)(1.47)
= 0.3 (50.40 51.40) + (0.7)(0.49)
AF t +1=F t+1 +T t +1

AF1
AF1
AF2
AF3
AF4
AF5
AF6
AF7
AF8

= F1
=
=
=
=
=
=
=
=

+ T1
37.00 +
37.00 +
38.50 +
39.75 +
39.88 +
40.44 +
38.72 +
44.36 +

0.00
0.00
0.45
0.69
0.52
0.53
(-0.14)
1.59

AF1 = 37.00
AF2 = 37.00
AF3 = 38.95
AF4 = 40.44
AF5 = 40.40
AF6 = 40.97
AF7 = 38.58
AF8 = 45.95

T2 = 0
T3 = 0.45
T4 = 0.69
T5 = 0.52
T6 = 0.53
T7 = -0.14
T8 = 1.59
T9 = 1.51
T10 = 2.61
T11 = 2.00
T12 = 1.94
T13 = 1.47
T14 = 0.49
T15 = - 0.08

AF9
AF10
AF11
AF12
AF13
AF14
AF15

=
=
=
=
=
=
=

45.68
50.84
51.42
53.21
53.60
51.80
50.40

+
+
+
+
+
+
+

1.51
AF9 = 47.19
2.61
AF10 = 53.45
2.00
AF11 = 53.42
1.94
AF12 = 55.15
1.47 AF13 = 55.07
0.49 AF14 = 52.29
(-0.08)AF15 = 50.32

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