The following table shows the data for the sales of a new music album at a store

Question

The following table shows the data for the sales of a new music album at a store for 4 consecutive months. Find de forecast for the next month using a 3-month moving average. The forecast for the next month is more than 90 but less than or equal to 100. The forecast for the next month is more than 100 but less than or equal to 110. The forecast for the next month is more than 120 but less than or equal to 130. The forecast for the next month is more than 110 but less than or equal to 120. An exponential smoothing model must have a smoothing constant (a) ____ to be roughly equivalent to a moving average model with a seven-month moving average. less than or equal to 0.10 more than 0.10 but less than or equal to 0.15 more than 0.15 but less than or equal to 0.20 more than 0.20

Explanation / Answer

1. The 3 month moving average for months 3 to 4 is given by:

m3  = ( 112+105+125) / 3 = 114

m4 = (105+125+118) / 3 = 116.

The forecast for next month(month 5) is just the moving average for the previous month (ie m4)

Hence the forecast for the next month is 116.

Therefore the answer is:

Forecast for the next month is more than 110 but less than or equal to 120

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