It shows company’s demands (thousands of units) over last 6 years. Data are shown on quarterly basis. The company’s management wants to forecast demand for the following years.
There are multiple forecasting methods that can be used in forecasting. Here I use three different methods – one is simple moving average, another is weighted moving average and the last is exponential smoothing method.
Moving average calculations
In both methods forecast for period t + 1 is calculated using previous n observations and taking average value or weighed average value. Number n is chosen by researcher or analyst. Forecast is calculated for the whole period (for years where values that are already observed) and for the future values (forecast).
Using simple moving average simply average value is calculated, while in weighted moving average weighted moving averages is calculated using some predefined weights.
So, to make calculations we take n = 3 and do calculation to find forecasting value for year 2008.
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