Solution: 1.
a) Weighted Moving Average:

Month Demand Forecast Error Error 1 60 2 55 3 43 4 65 50.0 15.0 15.0 5 52 56.4 -4.4 4.4 6 42 54.1 -12.1 12.1 7 47 49.6 -2.6 2.6 8 59 46.5 12.5 12.5 9 63 52.0 11.0 11.0 10 44 58.6 -14.6 -14.6 11 55 52.7 2.3 2.3 12 49 53.3 -4.3 4.3 13 ? 49.8 Total 78.8 Forecast for Period 4 = 430.5 + 550.3 + 60*0.2 Forecast for Period 5 = 650.5 + 430.3 + 55*0.2 Forecast for Period 13 = 490.5 + 550.3 + 44*0.2 = 49.8

b) Exponential Smoothing:
𝛼=0.2

Month Demand Forecast Error Error Month Demand Forecast Error Error 1 60 60.00 2 55 60.00 -5.00 5.00 3 43 59.00 -16.00 16.00 4 65 55.0 9.20 9.20 5 52 55.8 -5.64 5.64 6 42 57.64 -14.51 14.51 7 47 56.51 -6.61 6.61 8 59 53.61 6.71 6.71 9 63 53.63 9.37 9.37 10 44 55.50 -11.50 11.50 11 55 53.2 1.80 1.80 12 49 53.56 -4.56 4.56 13 ? 52.65 Total 90.90 Ft+1 =Ft +α(At –Ft) or Ft+1 =αAt +(1–α)Ft F1 = A1 (Supposed) = 60 F2 =F1 +α(A1 –F1)=60+0.2(60–60)=60 F3 =F2 +α(A2 –F2)=60+0.2(55–60)=59 F13 =F12 +α(A12 –F12)=53.56+0.2(49–53.56)=52.65 MAD
MAD = ∑ |Actual Demand – Forecast| / n
a) Weighted Moving Average: MAD=78.8/9=8.76
b) Exponential Smoothing: MAD=90.90/11=8.26
As MAD of Exponential Smoothing is less than that of Weighted Moving Average, it is concluded that Exponential Smoothing is more appropriate.