Question

1. Consulting income for Kate Walsh Associates for the period of Feb - July has been as follows:

Month       Income ($1,000s)

Feb              70

March         68.5

April            64.8

May             71.7

June             71.3

July               72.8

Use exponential smoothing to forecast August's income. Assume that the initial forecast for Feb is $65,000. The smoothing constant selected is alpha = 0 .1.

b. Resolve problem a. with alpha=0.3. Using MAD which smoothing constant provides a better forecast?

Answer 1