Ben Swanson, owner and manager of Swanson's Department Store, has decided to use statistical forecasting...
70.2K
Verified Solution
Link Copied!
Question
Accounting
Ben Swanson, owner and manager of Swanson's Department Store, has decided to use statistical forecasting to get a better handle on the demand for his major products. However, Ben now needs to decide which forecasting method is most appropriate for each category of product. One category is major household appliances, such as washing machines, which have a relatively stable sales level. Monthly sales of washing machines last year are shown below.
Month
Sales
January
23
February
24
March
22
April
28
May
22
June
27
July
20
August
26
September
21
October
29
November
23
December
28
Click here for the Excel Data File
Ben Swanson now has decided to use the exponential smoothing method to forecast future sales of washing machines, but he needs to decide on which smoothing constant to use. Using an initial estimate of 24, apply this method retrospectively to the 12 months of last year with = 0.1, 0.2, and 0.5.
Compare MAD for these three values of the smoothing constant . Then do the same with MSE.
\begin{tabular}{|l|c|c|c|} \hline & =0.1 & =0.2 & =0.5 \\ \hline MAD & & & \\ \hline MSE & & & \\ \hline \end{tabular}
