Helen, the manager of the Challenger store at The Clementi Mall, is deciding on the number of Dell laptops to keep in stock for the store. She collected monthly sales data for the last few months and found that sales were not stable. Table 2 shows the monthly sales for the Dell laptops. She needs to estimate the sales for the next few months to design an appropriate inventory policy for the store and is considering various forecasting methods. Table 2: Sales data for Dell Laptop Month Sales (units) April 300 May 340 June 370 July 410 August 470 LOG203 Copyright © 2023 Singapore University of Social Sciences (SUSS) Proctored Online Exam-July Semester 2023 September October 570 630 Page 4 of 6 Question 3a Is the judgmental forecasting method suitable for this situation? If not, suggest the methods she should consider. Provide the reason(s). Question 3b She is considering a 3-month simple moving average to forecast the sales for the following months. Calculate the forecast errors from July and determine the Mean Absolute Deviation for this method. Question 3c She is also considering the exponential smoothing method with a=0.6 to forecast the sales. Assume that the initial forecast for April was 320. Calculate the forecast errors from July and determine the Mean Absolute Deviation for this method.
Helen, the manager of the Challenger store at The Clementi Mall, is deciding on the number of Dell laptops to keep in stock for the store. She collected monthly sales data for the last few months and found that sales were not stable. Table 2 shows the monthly sales for the Dell laptops. She needs to estimate the sales for the next few months to design an appropriate inventory policy for the store and is considering various forecasting methods. Table 2: Sales data for Dell Laptop Month Sales (units) April 300 May 340 June 370 July 410 August 470 LOG203 Copyright © 2023 Singapore University of Social Sciences (SUSS) Proctored Online Exam-July Semester 2023 September October 570 630 Page 4 of 6 Question 3a Is the judgmental forecasting method suitable for this situation? If not, suggest the methods she should consider. Provide the reason(s). Question 3b She is considering a 3-month simple moving average to forecast the sales for the following months. Calculate the forecast errors from July and determine the Mean Absolute Deviation for this method. Question 3c She is also considering the exponential smoothing method with a=0.6 to forecast the sales. Assume that the initial forecast for April was 320. Calculate the forecast errors from July and determine the Mean Absolute Deviation for this method.
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter7: Inventories
Section: Chapter Questions
Problem 5CP: The following is an excerpt from a conversation between Paula Marlo, the warehouse manager for...
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Please assist to give a step by step solution with explanation on why the formula is used
Transcribed Image Text:Helen, the manager of the Challenger store at The Clementi Mall, is deciding on the
number of Dell laptops to keep in stock for the store. She collected monthly sales data
for the last few months and found that sales were not stable. Table 2 shows the monthly
sales for the Dell laptops. She needs to estimate the sales for the next few months to
design an appropriate inventory policy for the store and is considering various
forecasting methods.
Table 2: Sales data for Dell Laptop
Month
Sales (units)
April
300
May
340
June
370
July
410
August
470
LOG203 Copyright © 2023 Singapore University of Social Sciences (SUSS)
Proctored Online Exam-July Semester 2023
September
October
570
630
Page 4 of 6
Question 3a
Is the judgmental forecasting method suitable for this situation? If not, suggest the
methods she should consider. Provide the reason(s).
Question 3b
She is considering a 3-month simple moving average to forecast the sales for the
following months. Calculate the forecast errors from July and determine the Mean
Absolute Deviation for this method.
Question 3c
She is also considering the exponential smoothing method with a=0.6 to forecast the
sales. Assume that the initial forecast for April was 320. Calculate the forecast errors
from July and determine the Mean Absolute Deviation for this method.
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