TABLE 1. Historical Sales of Widgets During the last 12 months
Month/Sales
1-1650
2-1580
3-1610
4-1600
5-1650
6-1530
7-1660
8-1480
9-1600
10-1620
11-1550
12-1600

Assignment:
For the widget sales data given above, your boss wants you to compare the following models using the Mean Absolute Deviation (MAD) measure of error:

1. Exponential Smoothing model for an alpha of 0.4 and a Month 1 forecast of 1700 widgets.
2. Exponential Smoothing model for an alpha of 0.8 and a Month 1 forecast of 1700 widgets.

On sheet 1 of the file build an appropriate table in Excel that includes period, actual demand, forecasts and absolute deviations for the two models. Use one decimal place on all calculated numbers. In each case, be sure to calculate the MAD and make a forecast for Month 13. Also make sure there are equations behind all calculated numbers in the spreadsheet.

Develop a graph of Widgets versus Month comparing actual demand to forecast demand for the two models. Make sure the graph is placed on a separate sheet (i.e., page 2) as shown in the Excel tutorial at the Bb Ch. 9 Course Documents. Include appropriate title and axis labels. Also, on the vertical axis make sure the maximum is set to a value of 1800 and the minimum value to 1400 !!

Which model is best for the MAD measure and its corresponding Month 13 forecast.

Without doing any calculations, recommend a model that you think may give a
better forecast than the models you have been asked to study. Explain why you think this.

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