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Management Studies

Question: The famous Widget Company uses simple exponential smoothing to forecast the demand for its best-selling widgets. The company is considering whether it should use α = .1 or α = .3 for forecasting purposes. Use the following data for daily sales to arrive at a recommendation:

Develop an Excel spreadsheet to answer the following questions.

a. For the first seven days of data compare the absolute deviation for forecasts using α = .1 and α = .3. Start with A0 = 33. Which method is best?

b. Use the second week of data to make the same comparison. Use A7 = 32. Which method is best now?

c. What does this example illustrate?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92750434

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