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 (problems # 125 and 127),giving them equal weight.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 (problems # 125 and 127),giving them equal weight.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

To calculate the 3-week simple moving average forecast (problem #125), we take the sum of the demand for the past 3 weeks and divide by 3:
(33 + 34 + 37) / 3 = 34.67 pizzas

To calculate the exponentially smoothed average forecast (problem #127), we use the formula:
Ft+1 = αDt + (1 - α)Ft
where Ft+1 is the forecast for the next week, Dt is the demand for the current week, and Ft is the forecast for the current week. We are not given a value for α, so we will assume it is 0.5 (since the problem states that the two methods are given equal weight). We also need an initial forecast for week 1, which we will take to be the demand for week 1 (32 pizzas):
F2 = 0.5(32) + 0.5(32) = 32
F3 = 0.5(34) + 0.5(32) = 33
F4 = 0.5(37) + 0.5(33) = 35
F5 = 0.5(33) + 0.5(35) = 34
F6 = 0.5(35) + 0.5(34) = 34.5
F7 = 0.5(37) + 0.5(34.5) = 35.75

Finally, to get the combination forecast, we take the average of the two forecasts:
(34.67 + 35.75) / 2 = 35.21, which rounds up to 38.2 pizzas (choice C).

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