Preparation Work:

1. Read the document CH9 Time Series Methods

2. Use the Simple Moving Average, Weighted Moving Average, Exponential Smoothing and Forecast Error formulas to solve the following problems. (Problems are worth 10 points each)

Problem 1

Table 1

The manager of a pizza shop must forecast weekly demand for special pizzas so that he can order pizza shells weekly. Recent demand has been:

WEEK	No. Special Pizzas
1	30
2	45
3	33
4	36
5	35
6	40

1.1 Use the information from Table 1. Using a three-week simple moving average, what is the forecast for week 7?

1.2 If the actual number of pizzas in week 7 is 42, what is the forecast error for week 7?

1.3 What is the forecast for week 8?

Problem 2

Use the information from Table 1.

2.1 If a three-week weighted moving average were used, what would be the forecast for week 7? (The weights are 0.60, 0.30, and 0.10 with 0.60 applied to the most recent period and 0.10 applied to the oldest period.)

Problem 3

Use the information from Table 1. 

3.1 What is the exponentially smoothed forecast for week #7 if α = 0.9 is used, and the forecast for week #6 was 34?

Show your complete work and calculations for all problems.