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Use Holt’s method to create a model that minimizes the MSE for the data set (see picture attached). Use Solver to determine the optimal values of alpha and beta. a. What are the optimal values of alpha and beta? b. What are the forecasts for the next 2 years using this technique?

Use Holt’s method to create a model that minimizes the MSE for the data set (see picture attached). Use Solver to determine the optimal values of alpha and beta. a. What are the optimal values of alpha and beta? b. What are the forecasts for the next 2 years using this technique?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Use Holt’s method to create a model that minimizes the MSE for the data set (see picture attached). Use Solver to determine the optimal values of alpha and beta.


a. What are the optimal values of alpha and beta?

b. What are the forecasts for the next 2 years using this technique?

### Average Price Over Time The table below displays the average price over a series of years, providing insights into price trends and growth over time. | Year | Avg Price | |------|-----------| | 1 | $114,400 | | 2 | $115,300 | | 3 | $124,700 | | 4 | $126,600 | | 5 | $129,300 | | 6 | $133,500 | | 7 | $135,800 | | 8 | $141,800 | | 9 | $150,500 | | 10 | $159,100 | | 11 | $168,300 | | 12 | $176,200 | | 13 | $185,300 | #### Analysis - **Year 1-3:** There is a gradual increase in average price from $114,400 to $124,700. - **Year 4-6:** Continued growth is observed, with prices rising to $133,500. - **Year 7-9:** A more significant increase occurs, reaching $150,500 by year 9. - **Year 10-13:** A steady incline in average prices is seen, culminating at $185,300. This table demonstrates a consistent upward trend in average prices over the years, highlighting potential factors such as inflation, demand, or market conditions influencing these increments.
Transcribed Image Text:### Average Price Over Time The table below displays the average price over a series of years, providing insights into price trends and growth over time. | Year | Avg Price | |------|-----------| | 1 | $114,400 | | 2 | $115,300 | | 3 | $124,700 | | 4 | $126,600 | | 5 | $129,300 | | 6 | $133,500 | | 7 | $135,800 | | 8 | $141,800 | | 9 | $150,500 | | 10 | $159,100 | | 11 | $168,300 | | 12 | $176,200 | | 13 | $185,300 | #### Analysis - **Year 1-3:** There is a gradual increase in average price from $114,400 to $124,700. - **Year 4-6:** Continued growth is observed, with prices rising to $133,500. - **Year 7-9:** A more significant increase occurs, reaching $150,500 by year 9. - **Year 10-13:** A steady incline in average prices is seen, culminating at $185,300. This table demonstrates a consistent upward trend in average prices over the years, highlighting potential factors such as inflation, demand, or market conditions influencing these increments.
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