The Instant Paper Clip Office Supply Company sells and delivers office supplies to companies, schools, and agencies within a 50-mile radius of its warehouse. The office supply business is competitive, and the ability to deliver orders promptly is a big factor in getting new customers and maintaining old ones. The manager of the company wants to be certain that enough drivers and vehicles are available to deliver orders promptly and that they have adequate inventory in stock. Therefore, the manager wants to be able to forecast the demand for deliveries during the next month. From the records of previous orders, management has accumulated the following data for the past 4 months: Month Jan. Feb. Mar. Apr.
Orders 120 90 100 75
a. Compute the monthly demand forecast for February through November using the naive method.
b. Compute the monthly demand forecast for April through November using a 3- month moving average.
c. Compute the monthly demand forecast for June through November using a 5- month moving average.
d. Compute the monthly demand forecast for April through November using a 3- month weighted moving average. Use weights of 0.5, 0.33, and 0.17, with the heavier weights on the more recent months.
e. Compute the mean absolute deviation for June through October for each of the methods used. Which method would you use to forecast demand for November?