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Solution Demand Forecasting (Part 1) FOR STUDENTS

The document provides monthly actual demand and forecast values for demand from January 2018 to December 2019. It shows that the forecast often differed from actual demand, with errors ranging from -361 to 469 units. Various error metrics are also calculated at the bottom, including mean absolute error (MAD), mean squared error (MSE), and mean absolute percentage error (MAPE).

Uploaded by

Ahmad Bin Sadiq
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
88 views

Solution Demand Forecasting (Part 1) FOR STUDENTS

The document provides monthly actual demand and forecast values for demand from January 2018 to December 2019. It shows that the forecast often differed from actual demand, with errors ranging from -361 to 469 units. Various error metrics are also calculated at the bottom, including mean absolute error (MAD), mean squared error (MSE), and mean absolute percentage error (MAPE).

Uploaded by

Ahmad Bin Sadiq
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Actual

Month Forecast Error


Demand
January 437 798 -361
February 605 807 -202
March 722 815 -93
April 893 824 69
May 901 833 68
June 1311 842 469
July 1055 851 204
August 975 860 115
September 822 868 -46
October 893 877 16
November 599 886 -287
December 608 895 -287
Abs. Error (Error)2 Abs. % Error
361 130321 83%
202 40804 33%
93 8649 13%
69 4761 8%
68 4624 8%
469 219961 36%
204 41616 19%
115 13225 12%
46 2116 6%
16 256 2%
287 82369 48%
287 82369 47%

MAD MSE MAPE

184.75 52589.25 26%


Case Data for Demand Forecasting

Actual Abs.
Year Month Error Abs. (Error)
Demand %
Error 2
Error
January 36
February 42 36 6 6 36 14.28571
March 56 42 14 14 196 25
April 75 56 19 19 361 25.33333
May 85 75 10 10 100 11.76471
June 94 85 9 9 81 9.574468
2018
July 101 94 7 7 49 6.930693
August 108 101 7 7 49 6.481481
September 105 108 -3 3 9 2.857143
October 114 105 9 9 81 7.894737
November 111 114 -3 3 9 2.702703
December 110 111 -1 1 1 0.909091
January 98 110 -12 12 144 12.2449
February 101 98 3 3 9 2.970297
March 97 101 -4 4 16 4.123711
April 99 97 2 2 4 2.020202
May 100 99 1 1 1 1
June 95 100 -5 5 25 5.263158
2019
July 107 95 12 12 144 11.21495
August 104 107 -3 3 9 2.884615
September 98 104 -6 6 36 6.122449
October 104 98 6 6 36 5.769231
November 100 104 -4 4 16 4
December 102 100 2 2 4 1.960784
Naïve Technique
Actual Naïve Absolute Error Absolute
Year Month Error
Demand Forecast Error Squared % Error
January 36
February 42 36 6 6 36 14%
March 56 42 14 14 196 25%
April 75 56 19 19 361 25%
May 85 75 10 10 100 12%
June 94 85 9 9 81 10%
2018
July 101 94 7 7 49 7%
August 108 101 7 7 49 6%
September 105 108 -3 3 9 3% 120
October 114 105 9 9 81 8%
November 111 114 -3 3 9 3% 100

December 110 111 -1 1 1 1%


80
January 98 110 -12 12 144 12%
February 101 98 3 3 9 3% 60
March 97 101 -4 4 16 4%
April 99 97 2 2 4 2% 40

May 100 99 1 1 1 1%
20
June 95 100 -5 5 25 5%
2019
July 107 95 12 12 144 11% 0
1 2 3 4 5
August 104 107 -3 3 9 3%
September 98 104 -6 6 36 6%
October 104 98 6 6 36 6%
November 100 104 -4 4 16 4%
December 102 100 2 2 4 2%
January
February
March
April
May
June
2020
July
August
September
October
November
December
MAD = 6 SD of Forecast =
MSE = 62
MAPE = 7.5%

Chart Title
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0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Actual Demand Naïve Forecast


Two Period Simple Moving Average Technique
Actual SMA-2 Absolute Error Absolute
Year Month Error
Demand Forecast Error Squared % Error
January 36
February 42
March 56 39 17 17 289 30%
April 75 49 26 26 676 35%
May 85 66 20 20 380 23%
June 94 80 14 14 196 15%
2018
July 101 90 12 12 132 11%
2-m
August 108 98 11 11 110 10%
September 105 105 1 1 0 0% 120
October 114 107 8 8 56 7%
100
November 111 110 2 2 2 1%
December 110 113 -3 3 6 2% 80
January 98 111 -13 13 156 13%
February 101 104 -3 3 9 3% 60

March 97 100 -3 3 6 3%
40
April 99 99 0 0 0 0%
May 100 98 2 2 4 2% 20
June 95 100 -5 5 20 5%
2019 0
July 107 98 10 10 90 9% 1 2 3 4 5
August 104 101 3 3 9 3%
September 98 106 -8 8 56 8%
October 104 101 3 3 9 3%
November 100 101 -1 1 1 1%
December 102 102 0 0 0 0%
January
February
March
April
May
June
2020
July
August
September
October
November
December
echnique

MAD = 7.2 SD of Forecast =


MSE = 100.5
MAPE = 8.3%

2-months simple moving average forecast


120

100

80

60

40

20

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Actual Demand SMA-2 Forecast


Five Period Simple Moving Average Technique
Actual SMA-5 Absolute Error Absolute
Year Month Error
Demand Forecast Error Squared % Error
January 36
February 42
March 56
April 75
May 85
June 94 59 35 35 1239.04 37%
2018
July 101 70 31 31 936.36 30% 5-
August 108 82 26 26 665.64 24% 120
September 105 93 12 12 153.76 12%
October 114 99 15 15 237.16 14% 100
November 111 104 7 7 43.56 6%
80
December 110 108 2 2 4.84 2%
January 98 110 -12 12 134.56 12% 60
February 101 108 -7 7 43.56 7%
March 97 107 -10 10 96.04 10% 40

April 99 103 -4 4 19.36 4%


20
May 100 101 -1 1 1.00 1%
June 95 99 -4 4 16.00 4% 0
2019 1 2 3 4
July 107 98 9 9 73.96 8%
August 104 100 4 4 19.36 4%
September 98 101 -3 3 9.00 3%
October 104 101 3 3 10.24 3%
November 100 102 -2 2 2.56 2%
December 102 103 -1 1 0.36 1%
January
February
March
April
May
June
2020
July
August
September
October
November
December
echnique

MAD = 9.8 SD of Forecast =


MSE = 195.1
MAPE = 9.7%

5-months simple moving average forecast


120

100

80

60

40

20

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Actual Demand SMA-5 Forecast


Two Period Weighted Moving Average Technique
PERIOD 1 2 Sum
WEIGHTS 0.4 0.6 1

Actual WMA-2 Absolute Error Absolute


Year Month Error
Demand Forecast Error Squared % Error
January 36
February 42
March 56 40 16 16 268.96 29%
April 75 50 25 25 605.16 33%
May 85 67 18 18 309.76 21%
June 94 81 13 13 169.00 14%
2018
July 101 90 11 11 112.36 10% 3-
August 108 98 10 10 96.04 9%
120
September 105 105 0 0 0.04 0%
October 114 106 8 8 60.84 7% 100
November 111 110 1 1 0.36 1%
December 110 112 -2 2 4.84 2% 80

January 98 110 -12 12 153.76 13%


60
February 101 103 -2 2 3.24 2%
March 97 100 -3 3 7.84 3% 40
April 99 99 0 0 0.16 0%
May 100 98 2 2 3.24 2% 20

June 95 100 -5 5 21.16 5%


2019 0
July 107 97 10 10 100.00 9% 1 2 3 4
August 104 102 2 2 3.24 2%
September 98 105 -7 7 51.84 7%
October 104 100 4 4 12.96 3%
November 100 102 -2 2 2.56 2%
December 102 102 0 0 0.16 0%
January
February
March
April
May
June
2020
July
August
September
October
November
December
e Technique

MAD = SD of Forecast =
MSE =
MAPE =

3-months weighted moving average forecast


120

100

80

60

40

20

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Actual Demand WMA-2 Forecast


Two Period Weighted Moving Average Technique
PERIOD 1 2 Sum
WEIGHTS

Actual WMA-2S Absolute Error Absolute


Year Month Error
Demand Forecast Error Squared % Error
January 36
February 42
March 56
April 75
May 85
June 94
2018
July 101
August 108
September 105
October 114
November 111
December 110
January 98
February 101
March 97
April 99
May 100
June 95
2019
July 107
August 104
September 98
October 104
November 100
December 102
January
February
March
April
May
June
2020
July
August
September
October
November
December
Technique Using Solver

MAD = SD of Forecast =
MSE =
MAPE =

Chart Title
120

100

80

60

40

20

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Actual Demand WMA-2S Forecast


Five Period Weighted Moving Average Technique
PERIOD 1 2 3 4 5 Sum
WEIGHTS 0 0 0 0.076923 0.923077 1

Actual WMA-5 Absolute Error Absolute


Year Month Error
Demand Forecast Error Squared % Error
January 36
February 42
March 56
April 75
May 85
June 94 84 10 10 95.44 10%
2018 5
July 101 93 8 8 59.17 8%
August 108 100 8 8 56.83 7% 120
September 105 107 -2 2 6.06 2%
100
October 114 105 9 9 76.90 8%
November 111 113 -2 2 5.33 2% 80
December 110 111 -1 1 1.51 1%
January 98 110 -12 12 145.85 12% 60
February 101 99 2 2 4.31 2%
40
March 97 101 -4 4 14.21 4%
April 99 97 2 2 2.86 2% 20
May 100 99 1 1 1.33 1%
June 95 100 -5 5 24.24 5% 0
2019 1 2 3 4
July 107 95 12 12 134.92 11%
August 104 106 -2 2 4.31 2%
September 98 104 -6 6 38.82 6%
October 104 98 6 6 30.67 5%
November 100 104 -4 4 12.52 4%
December 102 100 2 2 2.86 2%
January
February
March
April
May
June
2020
July
August
September
October
November
December
e Technique

MAD = 5.1 SD of Forecast =


MSE = 37.8
MAPE = 5.0%

5-months weighted moving average forecast


120

100

80

60

40

20

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Actual Demand WMA-5 Forecast


Five Period Weighted Moving Average Technique
PERIOD 1 2 3 4 5 Sum
WEIGHTS

Actual WMA-5S Absolute Error Absolute


Year Month Error
Demand Forecast Error Squared % Error
January 36
February 42
March 56
April 75
May 85
June 94
2018
July 101
August 108
September 105
October 114
November 111
December 110
January 98
February 101
March 97
April 99
May 100
June 95
2019
July 107
August 104
September 98
October 104
November 100
December 102
January
February
March
April
May
June
2020
July
August
September
October
November
December
age Technique Using Solver

MAD = SD of Forecast =
MSE =
MAPE =

5-months weighted moving average forecast - op-


timum solution
120

100

80

60

40

20

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Actual Demand WMA-5S Forecast


Exponential Smoothing Technique
Alpha = 0.1

Actual ES-0.1 Absolute Error Absolute


Year Month Error
Demand Forecast Error Squared % Error
January 36
February 42
March 56
April 75
May 85
June 94
2018
July 101
August 108
September 105
Expone
October 114 120
November 111
100
December 110
January 98 80
February 101
March 97 60
April 99
40
May 100
June 95 20
2019
July 107
August 104 0
1 2 3 4 5
September 98
October 104
November 100
December 102
January
February
March
April
May
June
2020
July
August
September
October
November
December
MAD = SD of Forecast =
MSE =
MAPE =

Exponential smoothing forecast with alpha = 0.1


120

100

80

60

40

20

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Actual Demand ES-0.1 Forecast


Exponential Smoothing Technique
Alpha = 0.50

Actual ES-0.5 Absolute Error Absolute


Year Month Error
Demand Forecast Error Squared % Error
January 36
February 42
March 56
April 75
May 85
June 94
2018
July 101
August 108
September 105
October 114
November 111
December 110
January 98
February 101
March 97
April 99
May 100
June 95
2019
July 107
August 104
September 98
October 104
November 100
December 102
January
February
March
April
May
June
2020
July
August
September
October
November
December
MAD = SD of Forecast =
MSE =
MAPE =

Exponential smoothing forecast with alpha = 0.05


120

100

80

60

40

20

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Actual Demand ES-0.5 Forecast


Exponential Smoothing Technique Using Solver
Alpha =

Actual ESS Absolute Error Absolute


Year Month Error
Demand Forecast Error Squared % Error
January 36
February 42
March 56
April 75
May 85
June 94
2018
July 101
August 108
September 105
October 114
November 111
December 110
January 98
February 101
March 97
April 99
May 100
June 95
2019
July 107
August 104
September 98
October 104
November 100
December 102
January
February
March
April
May
June
2020
July
August
September
October
November
December
ing Solver

MAD = SD of Forecast =
MSE =
MAPE =

Chart Title
120

100

80

60

40

20

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Actual Demand ESS Forecast


Adjusted Exponential Smoothing Technique
Alpha = 0.30 Beta = 0.30

Actual ES AES Absolute Error


Year Month Tt+1 Error
Demand Forecast Forecast Error Squared
January 36
February 42
March 56
April 75
May 85
June 94
2018
July 101
August 108
September 105
October 114
November 111
December 110
January 98
February 101
March 97
April 99
May 100
June 95
2019
July 107
August 104
September 98
October 104
November 100
December 102
January
February
March
April
May
June
2020
July
August
September
October
November
December
hnique

Absolute
% Error

MAD = SD of Forecast =
MSE =
MAPE =

𝐅_(𝐭+𝟏)= 〖𝛂𝐀〗 _𝐭+(𝟏− 𝛂)𝐅_𝐭

〖 (𝐀𝐅) 〗 _(𝐭+𝟏)=
𝐅_(𝐭+𝟏)+𝐓_(𝐭+𝟏)
𝐓_(𝐭+𝟏)= 〖𝛃 (𝐅 〗 _(𝐭+𝟏 )− 𝐅_𝐭)+
〖 (𝟏−𝛃)𝐓 〗 _𝐭
Adjusted Exponential Smoothing Technique Usin
Alpha = Beta =

Actual ES AESS Absolute Error


Year Month Tt+1 Error
Demand Forecast Forecast Error Squared
January 36
February 42
March 56
April 75
May 85
June 94
2018
July 101
August 108
September 105
October 114
November 111
December 110
January 98
February 101
March 97
April 99
May 100
June 95
2019
July 107
August 104
September 98
October 104
November 100
December 102
January
February
March
April
May
June
2020
July
August
September
October
November
December
hnique Using Solver

Absolute
% Error

MAD = SD of Forecast =
MSE =
MAPE =

𝐅_(𝐭+𝟏)= 〖𝛂𝐀〗 _𝐭+(𝟏− 𝛂)𝐅_𝐭


〖 (𝐀𝐅) 〗 _(𝐭+𝟏)=
𝐅_(𝐭+𝟏)+𝐓_(𝐭+𝟏)
𝐓_(𝐭+𝟏)= 〖𝛃 (𝐅 〗 _(𝐭+𝟏 )− 𝐅_𝐭)+
〖 (𝟏−𝛃)𝐓 〗 _𝐭

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