Day Demand Day Demand
1 200 8 154
2 134 9 182
3 147 10 197
4 165 11 132
5 183 12 163
6 125 13 157
7 146 14 169

At the ABC Floral Shop, an argument developed between two of the owners, Bod and Henry, over the accuracy of forecasting methods. Bob argued that first-order smoothing with α = .1 would be the best method. Henry argued that the shop would get a better forecast with α = .3.

a. Using F1 = 100 and the data from above, which of the two managers is right?
b. Graph the two forecasts and the original data using Excel. What does the graph reveal?
c. Maybe the forecast accuracy could be improved even more. Try additional values of α = .2, .4 and .5 to see if better accuracy is achieved.