Assuming a forecast for Week 2 of 48 cases (f2 = 48), generate forecasts for Weeks 13 using exponential smoothing for both values of the smoothing constant (α1 = 0.20 and α2 = 0.40). b Compute the forecast error measures of MAD and MSE and determine which value of the smoothing constant provides more accurate forecasts.
Aarthi Medicals, a fictitious company, has been monitoring
the sales of the health drink for diabetics. As the demand
for the health drink has been steadily increasing, the
owner of the store, Nicole Carter, wants to develop good
forecasts for this product to determine how many cases
of this drink to order every week form the manufacturer.
Nicole has compiled the demand data shown in the
accompanying table for the past 12 weeks. Nicole wants
to evaluate forecasts using the exponential smoothing
method using smoothing constants values of α1 = 0.2
and α2 = 0.40.
Week Demand
in Cases
1 48
2 52
3 49
4 35
5 47
6 53
7 48
8 46
9 55
10 54
11 58
12 57
13
a Assuming a
(f2 = 48), generate forecasts for Weeks 13 using
exponential smoothing for both values of the smoothing
constant (α1 = 0.20 and α2 = 0.40).
b Compute the forecast error measures of MAD and MSE
and determine which value of the smoothing constant
provides more accurate forecasts.
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