15 points) American Fuel Oil is a distributor of fuel-oil products in the Northeast. It contracts
with shippers for deliveries of home heating oil and distributes product in its own trucks. Since
its storage capacity is limited, and purchasing storage for fuel oil it cannot store itself is
expensive, accurate demand forecasts are valuable. Quarterly data covering the past 10 years are
given in the table below.
Year
1st QTR
2nd QTR
3rd QTR
4th QTR
1
668.31
918.92
751.85
1002.46
2
698.44
960.36
785.75
1047.66
3
719.44
989.23
809.37
1079.16
4
732.57
1007.28
824.14
1098.85
5
751.55
1033.38
845.5
1127.32

6
790.03
1086.3
888.78
1185.05
7
813.8
1118.97
915.52
1220.7
8
828.93
1139.79
932.55
1243.41
9
866.16
1190.97
974.43
1299.24
10
891.47
1225.77
1002.91
1337.2
a. Develop an appropriate forecast using a 4-quarter moving-average approach.
b. Develop an appropriate forecast using exponential smoothing with and cyclicality (Holt-
Winters method). (alpha=.2,beta=.5, and gamma=.6)
c. Which of the two forecasts developed above would you recommend using?
Year
1st QTR
2nd QTR
3rd QTR
4th QTR
1

668.31
918.92
751.85
1002.46
2
698.44
960.36
785.75
1047.66
3
719.44
989.23
809.37
1079.16
4
732.57
1007.28
824.14
1098.85
5
751.55
1033.38
845.5
1127.32
6
790.03
1086.3
888.78
1185.05
7
813.8
1118.97
915.52
1220.7
8
828.93

1139.79
932.55
1243.41
9
866.16
1190.97
974.43
1299.24
10
891.47
1225.77
1002.91
1337.2