1. (7 points) The linear regression parameters for this demand pattern are slope = 760 and intercept = 1480 units. Using a regression forecast, what is your forecast for 2017?
Year Demand
2011 2,200
2012 3,600
2013 3,200
2014 4,000
2015 5,800
2. (18 Points) Consider the demand for trading cards listed below.
Year Demand
2011 50,000
2012 40,000
2013 54,000
2014 62,000
2015 86,000
a. Develop 2 year moving average forecasts for 2013, 2014, and 2015.
b. Develop exponential smoothing forecasts for 2012 through 2016 with a smoothing constant of .2. To initialize the process, you may assume that the forecast for 2011 was 50,000.
c. Calculate the MAD and the MAPE for both of your moving average forecasts and exponential smoothing forecasts covering 2013 through 2015 from part a and part b.
d. Based on part c, which model should you use for forecasting? Support your decision.
