Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 30

Develop an exponential smoothing forecast with =.20 for the demand data in Problem. Compare this forecast with the 3-month moving average computed in part (a) of Problem, using MAD , and indicate which forecast seems to be more accurate.
Problem
The Saki motorcycle dealer in the Minneapolis-St. Paul area wants to make an accurate forecast of demand for the Saki Super TXII motorcycle during the next month. Because the manufacturer is in Japan, it is difficult to send motorcycles back or reorder if the proper number is not ordered a month ahead. From sales records, the dealer has accumulated the following data for the past year:
a. Compute a 3-month moving average forecast of demand for April through January (of the next year).
b. Compute a 5-month moving average forecast for June through January.
c. Compare the two forecasts computed in (a) and (b), using MAD. Which one should the dealer use for January of the next year