The Coffee Shop around the Corner (CS) is famous for its fresh-made muffins. Hank, the owner of CS, knows that the demand for muffins depends very much on the time of the day: The demand is high in the morning decreases in the afternoon hours and is at its lowest in the evening. Hank is having trouble deciding how many muffins to make for each period of the day. He asked you to help him forecast the demand. If you do a good job in forecasting the demand for tomorrow, Hank will pay you to do this job on a recurring basis. The following is the demand data Hank collected in the past three days: Day 1 2 3
Period Morning Afternoon Evening Morning Afternoon Evening Morning Afternoon Evening
Demand 37 25 9 48 28 14 53 33 17
Using a 5-period moving average, forecast the morning, afternoon and evening demand for muffins on day 4.

The Coffee Shop around the Corner (CS)

5-period Moving Average Forecast of Demand

Day 4        Based on Average   Educated Guess

Morning            29.8                       41

Afternoon         29.8                       30

Evening            30.8                        19

Explanation:

a) Data and Calculations:

Day 1           Demand    5-period Moving

                                           Average

Morning           37

Afternoon       25

Evening            9

Day 2

Morning         48

Afternoon      28                     29.4

Evening          14                     24.8

Day 3

Morning        53                     30.4

Afternoon     33                     35.2

Evening         17                     29.0

Day 4

Morning                                29.8

Afternoon                             29.8

Evening                                30.8

b) Given that for the past three days, coffee demand in the evenings had not exceeded 20, we can tweak the evening demand to less than 20 and carry the remainder to the morning when demand is always high.  In that case, the demand on day 4 may read more like, Morning 41, Afternoon 30, and Evening 19.

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