1. Lenovo uses the ZX-81 chip in some of its laptop computers.
The prices for the chip during
the past 12 months were as follows:
a. Use a 2-month moving average on all the data and plot the averages and the
prices.
b. Use a 3-month moving average and add the 3-month plot to the graph created in
part (a).
c. Which one is better (using the mean absolute deviation): the 2-month average or
the 3-month average?
d. Compute the forecasts for each month using exponential smoothing, with an
initial forecast for January of $1.80. Use 𝛼 = .1, then 𝛼 = .3, and finally 𝛼 = .5. Using
MAPE, which 𝛼 is the best?
2. A logistics company has been in business for four years and wants to develop monthly
indices. Inventory monthly quantities for these years are shown below. Develop monthly
indices Estimate next year forecast for the months: April, July and December, assuming
that the annual inventory quantity will be 1500.
3. Income at the architectural firm Spraggins and Yunes for the period February to July was
as follows:
a. Use trend-adjusted exponential smoothing to forecast the firm’s August income.
Assume that the initial forecast average for February is $65,000 and the initial
trend adjustment is 0. The smoothing constants selected are 𝛼 = .1 and 𝛽 = .2.
b. Resolve the problem with 𝛼 = .1 and 𝛽 = .8. Using MSE, determine which
smoothing constants provide a better forecast
4. The University athletic department works on its budget for the next year basketball
attendance. Table below shows the accumulated number of seasonal basketball
attendance for the two last years. The University, due to the good performance of the
basketball team last year, expects the annual ticket sales to increase by 25%. What will
be the seasonal demand?
5. Dr. Lillian Fok, a New Orleans psychologist, specializes in treating patients who are
agoraphobic (i.e., afraid to leave their homes). The following table indicates how many
patients Dr. Fok has seen each year for the past 10 years. It also indicates what the
robbery rate was in New Orleans during the same year:
Using trend (linear regression) analysis, predict the number of patients Dr. Fok will see
in years 11 and 12 as a function of time. How well does the model fit the data?
6. The table below compares the accuracy of two forecasting methods used by company
XYZ to forecast its monthly sales of one of its product. The data pertain to the forecast
and actual sales levels over a period of five months. What is the value of the tracking
signal as of the end of May? Which method provides better forecast accuracy?
7. Dave Fletcher, the general manager of North Carolina Engineering Corporation (NCEC),
thinks that his firm’s engineering services contracted to highway construction firms are
directly related to the volume of highway construction business contracted with
companies in his geographic area. He wonders if this is really so, and if it is, can this
information help him plan his operations better by forecasting the quantity of his
engineering services required by construction firms in each quarter of the year? The
following table presents the sales of his services and total amounts of contracts for
highway construction over the past eight quarters:
a. Using this data, develop a regression equation for predicting the level of demand
of NCEC’s services.
b. Determine the coefficient of correlation and the standard error of the estimate.
