Production & Operation Management

Forecasting Assignment (No: 7)

2009--2011, Sec: A, Group No: 5
PGDM 2009
Submitted To: Mr. N Raju Gundala
Group Members Name Roll Number
Amit Shankar Choudhary 05
Arup Chakraborty 12
Ashvani Kumari 14
Bala Kishore Swami 15
Bornali Dey 17
Mini Dingra 41
1. The number of cans of soft drinks sold in a machine
each week is recorded below. Develop forecasts using
a three period moving average.
338, 219, 278, 265, 314, 323, 299, 259, 287, 302
Let Xt denote the number of cans of soft drinks sold in a machine of the tth week.
Now the 3 month moving average of the t+1th week is given by

Xt + Xt-1 + Xt-2
Ft=
3 , t=3, 4, & 5

Now the three periods moving average forecast is given in the following table

Three-period moving average

Forecast
Week (t) Xt
(Ft)
1 338
2 219
3 278
4 265 278.33
5 314 254.00
6 323 285.67
7 299 300.67
8 259 312.00
9 287 293.67
10 302 281.67
2. Use a four period moving average to forecast
attendance at baseball games. Historical records show
5346, 7812, 6513, 5783, 5982, 6519, 6283, 5577,
6712, and 7345

Let Xt denote the number of viewers of baseball game of the tth period. Now the 4 period mov-
ing average of the t+1th period is given by

Xt + Xt-1 + Xt-2 + Xt-3

Ft=
4 , t= 4, 5, 6 & 7

Now the four periods moving average forecast is given in the following table

Four period moving average

Period Forecast
(t) Xt (Ft)
1 5346
2 7812
3 6513
4 5783
5 5982 6363.5
6 6519 6522.5
7 6219 6199.25
8 6283 6125.75
9 5577 6250.75
10 6712 6149.5
11 7345 6197.75
3. A hospital records the number of floral deliveries its
patients receive each day. For a two week period, the
records show
15, 27, 26, 24, 18, 21, 26, 19, 15, 28, 25, 26, 17, 23
Use exponential smoothing with a smoothing constant
of .4 to forecast the number of deliveries.

The formula is Ft=α*At-1+ (1- α) Ft-1

Here,
α= 0.4
A=actual data
F=forecasted data
t=period number

α 0.4

Week Day Delivery Ft by exponential smoothing

1 15
2 27 15
3 26 19.8

1 4
5
24
18
22.28
22.968
6 21 20.9808
7 26 20.98848
8 19 22.993088
9 15 21.3958528
10 28 18.83751168

2 11
12
25
26
22.50250701
23.5015042
13 17 24.50090252
14 23 21.50054151
4. The number of girls who attend a summer basketball
camp has been recorded for the seven years the camp
has been offered. Use exponential smoothing with a
smoothing constant of .8 to forecast attendance for
the eighth year.

47, 68, 65, 92, 98, 121, 146

A

Ft=Ft-1+α (At-1-Ft-1)
Here; α= 0.8

α 0.8

Year Attendance Ft by exponential smoothing

1 47
2 68 47
3 65 63.8
4 92 64.76
5 98 86.552
6 121 95.7104
7 146 115.94208
8 139.988416
5. The number of pizzas ordered on Friday evenings
between 5:30 and 6:30 at a pizza delivery location for
the last 10 weeks is shown below. Use exponential
smoothing with smoothing constants of .2 and .8 to
forecast a value for week 11. Compare your forecasts
using MSE. Which smoothing constant would you
prefer?
58, 46, 55, 39, 42, 63, 54, 55, 61, 52
Ft=Ft-1+α (At-1-Ft-1)
α 0.2 MSE 84.12344725

No of Piz- Squared
Weeks za Ft by exponential smoothing Error Error
1 58
2 46 58 -12 144
3 55 55.6 -0.6 0.36
4 39 55.48 -16.48 271.5904
5 42 52.184 -10.184 103.713856
6 63 50.1472 12.8528 165.1944678
7 54 52.71776 1.28224 1.644139418
8 55 52.974208 2.025792 4.103833227
9 61 53.3793664 7.620634 58.07405647
10 52 54.90349312 -2.90349 8.430272298
11 54.3227945

α 0.8 MSE 107.1703721

No of Piz- Squared Er-

Weeks za Forecast using exponential smoothing Error ror
1 58
2 46 58 -12 144
3 55 48.4 6.6 43.56
4 39 53.68 -14.68 215.5024
5 42 41.936 0.064 0.004096
6 63 41.9872 21.0128 441.5377638
7 54 58.79744 -4.79744 23.01543055
8 55 54.959488 0.040512 0.001641222
9 61 54.9918976 6.008102 36.09729445
10 52 59.79837952 -7.79838 60.81472314
11 53.5596759

It is clear by MSE that if α value increases the error is also increase.

6. A trend line for the attendance at a restaurant's
Sunday brunch is given by
Number = 264 + .72(t)
How many guests would you expect in week 20?

We have to put the value 20 in the place of‘t’ and we get,

Number=264+ (0.72*20) we get

Number= 278.4 nos. Or 278 nos.

7. The number of new contributors to a public radio
station's annual fund drive over the last ten years is
63, 58, 61, 72, 98, 103, 121, 147, 163, 198
Develop a trend equation for this information, and use
it to predict next year's number of new contributors.
Let y denote the number of new contributors to a public radio station’s annual fund drive and x
denote the year. Assume that x and y is linearly related. Let y = α + β x be the suggested linear
relationship.
By the method of least squares the estimates of α and β are given by,

ˆ n∑ xi yi − (∑ xi )(∑ yi )
β=
n∑ xi2 − (∑ xi )2

∑ y − βˆ ∑ x i i
And
αˆ =
n

x Y Xy x2 y2

1 63 63 1 3969
2 58 116 4 3364
3 61 183 9 3721
4 72 288 16 5184
5 98 490 25 9604
6 103 618 36 10609
7 121 847 49 14641
8 147 1176 64 21609
9 163 1467 81 26569
10 198 1980 100 39204
55 1084 7228 385 138474

From the given data we have

n =10, ∑ x =55, ∑ y =1084, ∑ x y =7228, ∑ x =385 and ∑ y

i i i i i
2
i
2

=138474
Thus
 ˆ 10*7228 − 55*1084
β=
10*385 − (55) 2 = 15.3455 and
1084 − 15.3455*55
αˆ = = 24
10
Thus the trend equation is
y = 24 + 15.3455 x
The next year’s number of new contributors can be obtained by substituting x = 11 in the re-
gression equation y = 24 + 15.3455 x and is given by,

y = 24 + 15.3455*11
= 192.8
= 193
8. The average SAT verbal score for students from one
high school over the last ten exams is
508, 490, 502, 505, 493, 506, 492, 490, 503, 501
Do the scores support an increasing or a decreasing
trend?
SAT Verbal
Exam Score
1 508
2 490
3 502
4 505
5 493
6 506
7 492
8 490
9 503
10 501

510
SAT Verbal Score
y = -0.3515x + 500.93
R² = 0.0231
505
SAT Verbal Score

500

495

490

SAT Verbal Score

485
0 2 4 6 8 10 12
Exams

It is a downward trend, as per the above graph shows.

9. Use the following to forecast a value for period 14, a
second quarter.

T = 16.32 - .18(t)
C2 = .91
S2 = .75

t=0.91*0.75
= 0.6825

Putting the value of t in above equation we get

T= 16.32- 0.18*0.6825
T= 16.32-0.12285
T= 16.19715
10. The number of properties newly listed with a real
estate agency in each quarter over the last four
years is given. Calculate the seasonal index
values.
Year
Quarter 1 2 3 4
1 73 81 76 77
2 89 87 85 92
3 123 115 108 131
4 92 93 87 101

Quarter 1 Average Index 2 Average Index 3 Average Index 4 Average Index

1 73 94.25 0.7745 81 94 0.8617 76 89 0.8539 73 114.25 0.6389
2 89 94.25 0.9443 87 94 0.9255 85 89 0.9551 120 114.25 1.0503
3 123 94.25 1.3050 115 94 1.2234 108 89 1.2135 176 114.25 1.5405
4 92 94.25 0.9761 93 94 0.9894 87 89 0.9775 88 114.25 0.7702
TOTAL 285 376 356 457
11. Quarterly billing for water usage is shown below.
Year
Quarter 1 2 3 4
Winter 64 66 68 73
Spring 103 103 104 120
Summer 152 160 162 176
Fall 73 72 78 88

a. Find the seasonal index for each quarter.

b. De-seasonalize the data.
c. Find the trend line.
d. Assume there is no cyclical component and
forecast the summer billing for year 5.

a.
Quarter 1 Average Index 2 Average Index 3 Average Index 4 Average Index
Winter 64 98 0.653061 66 100.25 0.658354 68 103 0.660194 73 114.25 0.63895
Spring 103 98 1.05102 103 100.25 1.027431 104 103 1.009709 120 114.25 1.050328
Summer 152 98 1.55102 160 100.25 1.59601 162 103 1.572816 176 114.25 1.540481
Fall 73 98 0.744898 72 100.25 0.0288 78 103 0.757282 88 114.25 0.770241
TOTAL 392 401 412 457

b.
(1) (2) (3) (4) (5) (6) '3/5 (7) 1*1 (8) 1*6
Period Quarter Actual Billing Average of the same quarters for each Seasonal Factor Deseasonalized Billing Square of x*yb
(x) (y) year (yb) Period
1 Winter 64 67.75 0.000751734 85136.53137 1 85136.531
2 Spring 103 107.75 1.037304452 99.29582367 4 198.59165
3 Summer 152 162.5 1.564380265 97.16307692 9 291.48923
4 Fall 73 77.75 0.748495788 97.52893891 16 390.11576
5 Winter 66 0.000751734 87797.04797 25 438985.24
6 Spring 103 1.037304452 99.29582367 36 595.77494
7 Summer 160 1.564380265 102.2769231 49 715.93846
8 Fall 72 0.748495788 96.19292605 64 769.54341
9 Winter 68 0.000751734 90457.56458 81 814118.08
10 Spring 104 1.037304452 100.2598608 100 1002.5986
11 Summer 162 1.564380265 103.5553846 121 1139.1092
12 Fall 78 0.748495788 104.2090032 144 1250.508
13 Winter 73 0.000751734 97108.85609 169 1262415.1
14 Spring 120 1.037304452 115.6844548 196 1619.5824
15 Summer 176 1.564380265 112.5046154 225 1687.5692
16 Fall 88 0.748495788 117.5691318 256 1881.1061
136 1662
c.
Avg Of X = 136/16= 8.5,

∑xyb – n*avg(x)avg(yb)
B= = -1805.25
2 2
∑x – n*avg(x)

A= Avg(yb) – B*avg(x) = 37953.73

Therefore Y=A+Bx

Y = 37953.73+(-1805.25)x
12. A customer comment phone line is staffed from
8:00 a.m. to 4:30 p.m. five days a week. Records
are available that show the number of calls
received every day for the last five weeks.
Week Day Number Week Day Number
1 M 28 4 M 35
T 12 T 17
W 16 W 16
TH 15 TH 20
F 23 F 29
2 M 29 5 M 37
T 10 T 19
W 14 W 18
TH 14 TH 21
F 26 F 28
3 M 32
T 15
W 15
TH 18
F 27

a. Use this information to calculate a seasonal index.

b. De-seasonalize the data.
c. Find the trend line.
d. Assume there is no cyclical component and forecast
the calls for week 6.

Slope Intercept
0.28 17.67

Week n Day Number Trend Seasonal Index Deseasonal Data

1 1 M 28 17.9538 1.51 18.57
2 T 12 18.2376 0.68 17.56
3 W 16 18.5214 0.74 21.63
4 TH 15 18.8052 0.82 18.20
5 F 23 19.089 1.25 18.47
2 6 M 29 19.3728 1.51 19.24
7 T 10 19.6566 0.68 14.63
8 W 14 19.9404 0.74 18.93
9 TH 14 20.2242 0.82 16.99
 10 F 26 20.508 1.25 20.88
3 11 M 32 20.7918 1.51 21.23
12 T 15 21.0756 0.68 21.95
13 W 15 21.3594 0.74 20.28
14 TH 18 21.6432 0.82 21.85
15 F 27 21.927 1.25 21.68
4 16 M 35 22.2108 1.51 23.22
17 T 17 22.4946 0.68 24.87
18 W 16 22.7784 0.74 21.63
19 TH 20 23.0622 0.82 24.27
20 F 29 23.346 1.25 23.29
5 21 M 37 23.6298 1.51 24.54
22 T 19 23.9136 0.68 27.80
23 W 18 24.1974 0.74 24.33
24 TH 21 24.4812 0.82 25.49
25 F 28 24.765 1.25 22.48
6 26 M 25.0488 1.51
27 T 25.3326 0.68
28 W 25.6164 0.74
29 TH 25.9002 0.82
30 F 26.184 1.25
14. A 24-hour coffee/donut shop makes donuts every
eight hours. The manager must forecast donut
demand so that the bakers have the fresh
ingredients they need. Listed below is the actual
number of glazed donuts (in dozens) sold in each
of the preceding 13 eight-hour shifts.
Date Shift Demand(dozens)
June 3 Day 59
Evening 47
Night 35
June 4 Day 64
Evening 43
Night 39
June 5 Day 62
Evening 46
Night 42
June 6 Day 64
Evening 50
Night 40
June 7 Day 69

Forecast the demand for glazed donuts for the three

shifts of June 8 and the three shifts of June 9.
Slope Intercept
0.4945 47.308

Date n Shift Demand(dozens) Trend

3-Jun 1 Day 59 47.80
2 Evening 47 48.30
3 Night 35 48.79
4-Jun 4 Day 64 49.29
5 Evening 43 49.78
6 Night 39 50.28
5-Jun 7 Day 62 50.77
8 Evening 46 51.26
9 Night 42 51.76
6-Jun 10 Day 64 52.25
11 Evening 50 52.75
12 Night 40 53.24
7-Jun 13 Day 69 53.74
14 Evening 54.23
15 Night 54.73
8-Jun 16 Day 55.22
17 Evening 55.71
18 Night 56.21
9-Jun 19 Day 56.70
20 Evening 57.20
21 Night 57.69
15.In order to forecast the attendance at an annual
tennis tournament, a model has been developed which
uses attendance from the previous year and the
amount spent for advertising this year. From the
years shown in the table, forecast the attendance for
years 2-5 and calculate the forecast error.
Advertising
Year Attendance Expenditure Forecast Error
1 8363 750
2 9426 1250
3 9318 3200
4 10206 4500
5 11018 5600

The multiple regression model is Attendance = 6738 +

.23($) + .25 (Attlag)

Attlag is last year’s actual attendance.

So, if we take the 1st year attendance and put in to the equation we get,

Attendance = 6738 + 0.23*1250 + 0.25*8363 like wise we get from excel sheet.

Advertising
Year Attendance Expenditure Forecast Error
1 8363 750
2 9426 1250 9116.25 309.75
3 9318 3200 9830.5 -512.5
4 10206 4500 10102.5 103.5
5 11018 5600 10577.5 440.5