Production and Operations Analysis, Seventh Edition
7th Edition
ISBN: 9781478623069
Author: Steven Nahmias, Tava Lennon Olsen
Publisher: Waveland Press, Inc.
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 2.9, Problem 36P
Summary Introduction
To calculate: MAD and MSE of actual given data and
Mean absolute deviation
MAD is calculated by the division of sum of absolute deviations and number of observations. Here, absolute deviations are calculated by deducting the forecasted data from the actual data.
Mean squared error
MSE is calculated by the division of sum of square of deviations and number of observations. Here, deviations are calculated by deducting estimated data from the actual data.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Apply 4-period SMA and 4-period WMA (0.1, 0.2, 0.3, 0.4) to the given data. Determine
the MAD, MSE, and RSE for both method and provide the forecast for the next period using
the method with better MSE.
period demand period demand
120
1
13
131
2
124
14
132
3
122
15
133
4
123
16
130
132
125
17
128
18
134
7
129
19
134
8
127
20
133
129
21
131
10
128
22
135
11
130
23
137
12
132
24
138
The number of cases of merlot wine sold by the Connor Owen winery in an eight-year period is as follows:
YEAR
CASES OFMERLOT WINE
1
286
2
372
3
414
4
472
5
374
6
516
7
426
8
392
Using an exponential smoothing model with an alpha value of 0.20, estimate the smoothed value calculated as of the end of year 8. Use the average demand for years 1 through 3 as your initial forecast for year 4, and then smooth the forecast forward to year 8.
A pharmacist has been monitoring sales of a certain over-the-counter pain reliever. Daily sales during the last 15 days were
a. Assume the data refer to demand rather than sales. Using trend-adjusted exponential smoothing with an initial forecast of 46 for Day 8, an initial trend estimate of 2, and α = β = .3, develop demand forecasts for Days 9 through 16. Then compute the resultant MSE using the error values from Days 8 through 15. (Round your intermediate period-by-period forecast and error values to 3 decimal places. Round your final MSE answer to 3 decimal places.)
MSE =
Day:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Number sold:
31
32
35
38
38
42
42
43
41
44
46
46
49
55
52
Chapter 2 Solutions
Production and Operations Analysis, Seventh Edition
Ch. 2.4 - Prob. 1PCh. 2.4 - Prob. 2PCh. 2.4 - Prob. 3PCh. 2.4 - Prob. 4PCh. 2.4 - Prob. 5PCh. 2.4 - Prob. 6PCh. 2.4 - Prob. 7PCh. 2.4 - Prob. 8PCh. 2.4 - Prob. 9PCh. 2.6 - Prob. 10P
Ch. 2.6 - Prob. 11PCh. 2.6 - Prob. 12PCh. 2.6 - Prob. 13PCh. 2.6 - Prob. 14PCh. 2.6 - Prob. 15PCh. 2.7 - Prob. 16PCh. 2.7 - Prob. 17PCh. 2.7 - Prob. 18PCh. 2.7 - Prob. 19PCh. 2.7 - Prob. 20PCh. 2.7 - Prob. 21PCh. 2.7 - Prob. 22PCh. 2.7 - Prob. 23PCh. 2.7 - Prob. 24PCh. 2.7 - Prob. 25PCh. 2.7 - Prob. 26PCh. 2.7 - Prob. 27PCh. 2.8 - Prob. 28PCh. 2.8 - Prob. 29PCh. 2.8 - Prob. 30PCh. 2.8 - Prob. 31PCh. 2.8 - Prob. 32PCh. 2.9 - Prob. 33PCh. 2.9 - Prob. 34PCh. 2.9 - Prob. 35PCh. 2.9 - Prob. 36PCh. 2.9 - Prob. 37PCh. 2.10 - Prob. 38PCh. 2.10 - Prob. 42PCh. 2.10 - Prob. 43PCh. 2.10 - Prob. 44PCh. 2.10 - Prob. 45PCh. 2 - Prob. 47APCh. 2 - Prob. 48APCh. 2 - Prob. 49APCh. 2 - Prob. 50APCh. 2 - Prob. 51APCh. 2 - Prob. 52APCh. 2 - Prob. 53APCh. 2 - Prob. 54APCh. 2 - Prob. 55APCh. 2 - Prob. 56APCh. 2 - Prob. 57APCh. 2 - Prob. 58AP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- The file P13_42.xlsx contains monthly data on consumer revolving credit (in millions of dollars) through credit unions. a. Use these data to forecast consumer revolving credit through credit unions for the next 12 months. Do it in two ways. First, fit an exponential trend to the series. Second, use Holts method with optimized smoothing constants. b. Which of these two methods appears to provide the best forecasts? Answer by comparing their MAPE values.arrow_forwardThe file P13_22.xlsx contains total monthly U.S. retail sales data. While holding out the final six months of observations for validation purposes, use the method of moving averages with a carefully chosen span to forecast U.S. retail sales in the next year. Comment on the performance of your model. What makes this time series more challenging to forecast?arrow_forwardThe file P13_02.xlsx contains five years of monthly data on sales (number of units sold) for a particular company. The company suspects that except for random noise, its sales are growing by a constant percentage each month and will continue to do so for at least the near future. a. Explain briefly whether the plot of the series visually supports the companys suspicion. b. By what percentage are sales increasing each month? c. What is the MAPE for the forecast model in part b? In words, what does it measure? Considering its magnitude, does the model seem to be doing a good job? d. In words, how does the model make forecasts for future months? Specifically, given the forecast value for the last month in the data set, what simple arithmetic could you use to obtain forecasts for the next few months?arrow_forward
- The file P13_29.xlsx contains monthly time series data for total U.S. retail sales of building materials (which includes retail sales of building materials, hardware and garden supply stores, and mobile home dealers). a. Is seasonality present in these data? If so, characterize the seasonality pattern. b. Use Winters method to forecast this series with smoothing constants = = 0.1 and = 0.3. Does the forecast series seem to track the seasonal pattern well? What are your forecasts for the next 12 months?arrow_forwardThe file P13_28.xlsx contains monthly retail sales of U.S. liquor stores. a. Is seasonality present in these data? If so, characterize the seasonality pattern. b. Use Winters method to forecast this series with smoothing constants = = 0.1 and = 0.3. Does the forecast series seem to track the seasonal pattern well? What are your forecasts for the next 12 months?arrow_forwardUnder what conditions might a firm use multiple forecasting methods?arrow_forward
- The file P13_26.xlsx contains the monthly number of airline tickets sold by the CareFree Travel Agency. a. Create a time series chart of the data. Based on what you see, which of the exponential smoothing models do you think will provide the best forecasting model? Why? b. Use simple exponential smoothing to forecast these data, using a smoothing constant of 0.1. c. Repeat part b, but search for the smoothing constant that makes RMSE as small as possible. Does it make much of an improvement over the model in part b?arrow_forwardThe Baker Company wants to develop a budget to predict how overhead costs vary with activity levels. Management is trying to decide whether direct labor hours (DLH) or units produced is the better measure of activity for the firm. Monthly data for the preceding 24 months appear in the file P13_40.xlsx. Use regression analysis to determine which measure, DLH or Units (or both), should be used for the budget. How would the regression equation be used to obtain the budget for the firms overhead costs?arrow_forwardThe owner of a restaurant in Bloomington, Indiana, has recorded sales data for the past 19 years. He has also recorded data on potentially relevant variables. The data are listed in the file P13_17.xlsx. a. Estimate a simple regression equation involving annual sales (the dependent variable) and the size of the population residing within 10 miles of the restaurant (the explanatory variable). Interpret R-square for this regression. b. Add another explanatory variableannual advertising expendituresto the regression equation in part a. Estimate and interpret this expanded equation. How does the R-square value for this multiple regression equation compare to that of the simple regression equation estimated in part a? Explain any difference between the two R-square values. How can you use the adjusted R-squares for a comparison of the two equations? c. Add one more explanatory variable to the multiple regression equation estimated in part b. In particular, estimate and interpret the coefficients of a multiple regression equation that includes the previous years advertising expenditure. How does the inclusion of this third explanatory variable affect the R-square, compared to the corresponding values for the equation of part b? Explain any changes in this value. What does the adjusted R-square for the new equation tell you?arrow_forward
- The file P13_25.xlsx contains the quarterly numbers of applications for home mortgage loans at a branch office of Northern Central Bank. a. Create a time series chart of the data. Based on what you see, which of the exponential smoothing models do you think will provide the best forecasting model? Why? b. Use simple exponential smoothing to forecast these data, using a smoothing constant of 0.1. c. Repeat part b, but search for the smoothing constant that makes RMSE as small as possible. Does it make much of an improvement over the model in part b? Is it guaranteed to produce better forecasts for the future?arrow_forwardManagement of a home appliance store wants to understand the growth pattern of the monthly sales of a new technology device over the past two years. The managers have recorded the relevant data in the file P13_05.xlsx. Have the sales of this device been growing linearly over the past 24 months? By examining the results of a linear trend line, explain why or why not.arrow_forwardDo the sales prices of houses in a given community vary systematically with their sizes (as measured in square feet)? Answer this question by estimating a simple regression equation where the sales price of the house is the dependent variable, and the size of the house is the explanatory variable. Use the sample data given in P13_06.xlsx. Interpret your estimated equation, the associated R-square value, and the associated standard error of estimate.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Contemporary MarketingMarketingISBN:9780357033777Author:Louis E. Boone, David L. KurtzPublisher:Cengage Learning
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
MarketingMarketingISBN:9780357033791Author:Pride, William MPublisher:South Western Educational Publishing
Contemporary Marketing
Marketing
ISBN:9780357033777
Author:Louis E. Boone, David L. Kurtz
Publisher:Cengage Learning
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Marketing
Marketing
ISBN:9780357033791
Author:Pride, William M
Publisher:South Western Educational Publishing
Single Exponential Smoothing & Weighted Moving Average Time Series Forecasting; Author: Matt Macarty;https://www.youtube.com/watch?v=IjETktmL4Kg;License: Standard YouTube License, CC-BY
Introduction to Forecasting - with Examples; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=98K7AG32qv8;License: Standard Youtube License