OPERATIONS MANAGEMENT IN THE SUPPLY CHAIN: DECISIONS & CASES (Mcgraw-hill Series Operations and Decision Sciences)
7th Edition
ISBN: 9780077835439
Author: Roger G Schroeder, M. Johnny Rungtusanatham, Susan Meyer Goldstein
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 10, Problem 7P
Compute the errors of bias and absolute deviation for the forecasts in problem 6 which of the
Expert Solution & Answer
Summary Introduction
To compute: The errors of bias and absolute deviation and explain which forecast is the best.
Introduction:
Exponential smoothing:
In exponential smoothing forecast method, older data are given lesser importance, and newer data are given more importance. It is efficient in making short-term forecasts.
Explanation of Solution
Given information:
Forecast for period 1 (F1) = 90
Smoothing constant (α) = 0.1
| Period | Dt |
| 1 | 92 |
| 2 | 127 |
| 3 | 106 |
| 4 | 165 |
| 5 | 125 |
| 6 | 111 |
| 7 | 178 |
| 8 | 97 |
Formula for exponential smoothing:
Calculation of forecast:
The forecast for period 1 is 90.
Period 2:
The forecast for period 2 is 90.2.
Period 3:
The forecast for period 3 is 93.9.
Period 4:
The forecast for period 4 is 95.1.
Period 5:
The forecast for period 5 is 102.1.
Period 6:
The forecast for period 6 is 104.4.
Period 7:
The forecast for period 7 is 105.
Period 8:
The forecast for period 8 is 112.3.
Given information:
Forecast for period 1 (F1) = 90
Smoothing constant (α) = 0.3
| Period | Dt |
| 1 | 92 |
| 2 | 127 |
| 3 | 106 |
| 4 | 165 |
| 5 | 125 |
| 6 | 111 |
| 7 | 178 |
| 8 | 97 |
Calculation of forecast:
The forecast for period 1 is 90.
Period 2:
The forecast for period 2 is 90.6.
Period 3:
The forecast for period 3 is 101.5.
Period 4:
The forecast for period 4 is 102.9.
Period 5:
The forecast for period 5 is 121.5.
Period 6:
The forecast for period 6 is 122.6.
Period 7:
The forecast for period 7 is 119.1.
Period 8:
The forecast for period 8 is 136.8.
Calculation of error and absolute deviation:
For α = 0.1
Excel work:
Excel formula:
For α = 0.3
Excel work:
Excel formula:
For α = 0.1
Sum of error = 208
Sum of absolute deviation = 238.6
For α = 0.3
Sum of error = 116
Sum of absolute deviation = 218.8
The sum of error and absolute deviation is lower for α = 0.3 when compared with values of α = 0.1 (116 < 208) and (218.8 < 238.6). Hence, the forecasting method with α = 0.3 will be the best method.
The forecasting method with α = 0.3 is the best method.
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Chapter 10 Solutions
OPERATIONS MANAGEMENT IN THE SUPPLY CHAIN: DECISIONS & CASES (Mcgraw-hill Series Operations and Decision Sciences)
Ch. 10.S - Ace Hardware sells spare parts for lawn mowers....Ch. 10.S - eXcel The daily demand for chocolate donuts from...Ch. 10.S - The SureGrip Tire Company produces tires of...Ch. 10.S - eXcelManagement believes there is a seasonal...Ch. 10.S - Management of the ABC Floral Shop believes that...Ch. 10 - Prob. 1DQCh. 10 - What is the distinction between forecasting and...Ch. 10 - Qualitative forecasting methods should be used...Ch. 10 - Describe the uses of qualitative, time-series, and...Ch. 10 - Qualitative forecasts and causal forecasts are not...
Ch. 10 - Prob. 6DQCh. 10 - What are the advantages of exponential smoothing...Ch. 10 - How should the choice of be made for exponential...Ch. 10 - Prob. 9DQCh. 10 - Prob. 10DQCh. 10 - Explain how CPFR can be used to reduce forecasting...Ch. 10 - Under what circumstances might CPFR be useful, and...Ch. 10 - Daily demand for marigold flowers at a large...Ch. 10 - The number of daily calls for the repair of Speedy...Ch. 10 - 3-The ABC Floral Shop sold the following number of...Ch. 10 - The Handy Dandy Department Store had forecast...Ch. 10 - 5-The Yummy Ice Cream Company uses the exponential...Ch. 10 - Using the data in problem 2, prepare exponentially...Ch. 10 - Compute the errors of bias and absolute deviation...Ch. 10 - eXcel At the ABC Floral Shop, an argument...Ch. 10 - Only a portion of the following table for...Ch. 10 - A candy store has sold the following number of...Ch. 10 - eXcel A grocery store sells the following number...Ch. 10 - Prob. 12PCh. 10 - The Easyfit tire store had demand for tires shown...Ch. 10 - Prob. 14P
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