Problem #2 Month Actual Battery Sales Forecast ? = 0.5 January 20 22 February 21
ID: 446928 • Letter: P
Question
Problem #2
Month
Actual Battery Sales
Forecast
? = 0.5
January
20
22
February
21
21
March
15
21
April
14
18
May
13
16
June
16
14.5
Two parameters are needed to make the Simple Exponential Smoothing model operational. They are:
A starting forecast [here the starting forecast = 22]
Value of Alpha [one value of Alpha = 0.5; and the second value of Alpha = 0.8]
Month
Actual Battery Sales
Forecast
? = 0.5
January
20
22
February
21
21
March
15
21
April
14
18
May
13
16
June
16
14.5
Explanation / Answer
Month
Actual Battery Sales
Forecast
= 0.5
Forecast
= 0.8
January
20
22
22
February
21
21
21.2
March
15
21
16.4
April
14
18
14.44
May
13
16
13.2
June
16
14.5
15.45
The confidence level associated with the 0.5 smoothing constant is 95% whereas that associated with 0.8 is 98%. The alpha constant of 0.8 gives a better prediction of the actual sales, as the values predicted are much closer to the actual sale, hence, the alpha constant of 0.8 is better than the 0.5 constant.
Month
Actual Battery Sales
Forecast
= 0.5
Forecast
= 0.8
January
20
22
22
February
21
21
21.2
March
15
21
16.4
April
14
18
14.44
May
13
16
13.2
June
16
14.5
15.45
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