The following is a paycer uble giving various sit situations (2o) State of natur

ID: 345775 • Letter: T

Question

The following is a paycer uble giving various sit situations (2o) State of nature Altemative 1 Altemative 2 Alternative 3 Do Nothing 120 140 120 200 100 50 100 120 180 x.Maximin, Equally Likely, Criterion ofRealinn (use -0.3), and Minimax Regret? 5. Daily demand for newspapers for day 1, 2,3, 4, 5, 6, and 7 are 12, 13, 16, 15, 12, 18, and 14 respectively. F moving average and recast sales for day 4, 5, 6, 7, and 8 using 3-day weighted moving average in which the weights are 4. 2, and 2 (the highest weight is for the most recent day demand). Which method do you think is best? (20%) 6. Use exponential smoothing with -0.65 to forecast the battery sales for February, March, April, and May. Assume the forecast for January was 20 batteries. (15%) Automobile Battery Sales Month January February March April May 21 15 18

Explanation / Answer

Please find answer to question number 6 :

Formula for Exponential smoothing forecast as follows :

Ft = alpha x At-1 + ( 1 – alpha) x Ft-1

Ft, Ft-1 = Forecast for period t and t-1 respectively

At-1 = Actual sales for period t-1

Alpha = Exponential smoothing constant = 0.65

Therefore ,

Ft = 0.65 x At-1 + 0.35xFt-1

It is also given that forecast for January = 30

Using above formula and forecast for January = 30, please find below forecasted values in tabular format :

Month

Actual sales

Forecast value

January

February

24.80

March

22.33

April

17.57

May

17.85