Table 8.8
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:

-Use the information from Table 8.8. The pizza shop manager believes that a combination forecast might improve her ability to predict future demand, and thus improve keeping fresh ingredients on hand. She decides to use the 3-week simple moving average and exponentially smoothed average forecast, giving them equal weight. The smoothing constant is .10 and the previously forecasted demand for week 6 was 39.28 pizzas. What is her forecast for week #7?
A) 35.5 pizzas
B) 37.4 pizzas
C) 38.2 pizzas
D) 40.2 pizzas

Question

Table 8.8
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:
 
-Use the information from Table 8.8. The pizza shop manager believes that a combination forecast might improve her ability to predict future demand, and thus improve keeping fresh ingredients on hand. She decides to use the 3-week simple moving average and exponentially smoothed average forecast, giving them equal weight. The smoothing constant is .10 and the previously forecasted demand for week 6 was 39.28 pizzas. What is her forecast for week #7?
A) 35.5 pizzas 
B) 37.4 pizzas 
C) 38.2 pizzas 
D) 40.2 pizzas

Quizplus · Accepted Answer

Using the 3-week simple moving average, we can calculate the forecast for week 7 as:

(33 + 35 + 37) / 3 = 35

Using the exponentially smoothed average with a smoothing constant of 0.10, we can calculate the forecast for week 7 as:

Ft = αAt-1 + (1-α)Ft-1 
= 0.10(39.28) + 0.90(35.0)
= 3.928 + 31.50
= 35.43

Taking the average of these two forecasts (35 and 35.43), we get:

(35 + 35.43) / 2 = 35.22

Therefore, the best choice is C, 38.2 pizzas, which is closest to our calculated forecast of 35.22 pizzas.

Table 8.8 The Manager of a Pizza Shop Must Forecast Weekly Demand