Storrs Cycles has just started selling the new Cyclone mountain bike, with month

Question

Storrs Cycles has just started selling the new Cyclone mountain bike, with monthly sales as shown in the table. a) Based on the given monthly sales data, it can be said that there is not a strong linear trend in sales over time. b) First, co-owner Bob Day wants to forecast by exponential smoothing by initially setting February's forecast equal to January's sales with alpha = 0.20. Using the forecasting method, Bob's forecast for the month of May is (round your response to two decimal places): Second, co-owner Sherry Snyder wants to forecast using a three-period moving average. The forecast for the month of May is (round your response to two decimal places).

Explanation / Answer

3-period moving average forecast

3-period moving average forecast for april = (407 +372+418)/3

= 399

Therfore forecast for the month of May is 381.67

Month Sales Forecast Jan 407 Feb 372 Mar 418 Apr 355 399 May 381.67

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