Festive Floral is gearing up for online carnation sales thisMother’s Day. They specialize in selling organic extra-large redand pink carnations. The price is $0.7 per stem, which includesfree one-day shipping to the customer. Festive Floral pre-orderscarnations directly from a certified organic farm at the cost of$0.15 per stem. The order is made prior to the growing season andflowers are grown accordingly, so the pre-order quantity cannot bechanged. However, if Festive Floral runs out of pre-orderedcarnations, they can always pick up more immediately from a localwholesaler that carries carnations of the same quality, at theprice of $0.5 per stem. Historical demand for the past 10 years aregiven below.
Year: Red, Pink; 2008: 4008, 3288; 2009: 3948, 3648; 2010: 4092,3636; 2011: 3984, 3684; 2012: 3996, 3792; 2013: 3888, 3720; 2014:4128, 3564; 2015: 4104, 3744; 2016: 4380, 3828; 2017: 4392,3744
For all questions below, please round your answers to twodecimal points. Show your work by explaining the steps of yourcalculation.
(a) Using exponential smoothing with parameter ?? = 0.9, what isyour forecast for red carnations in 2018? What is the MAD of yourforecast?
(b) Based on the forecast above, what is the optimal number ofred carnations to pre-order from the farm?
(c) Repeat Parts (a) and (b) for pink carnations.
