Assignment 2 - Assignment 2 6) The accuracy of a...

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Assignment 2 6) The accuracy of a forecasting method depends on the data that is used. If demand is strongly linear and it is safe to assume that it will stay this way, linear regression is the most accurate way of forecasting demand. However, for non-linear demand, exponential smoothing is the most accurate, especially with trend included. It is very accurate as long as an effective smoothing constant is used. This is because recent demand much more accurately represents future demand and exponential smoothing takes this into account. Also, the shortcoming of demand lagging can be minimized by adding a trend factor to the forecast. 2) a) F July = 0.60(A June )+0.30(A May )+0.10(A April ) = 0.60(15)+0.30(16)+0.10(12) = 9 + 4.8 + 1.2 = 15 b) F July = (A June + A May + A April )/3 = (15 + 16 + 12)/3 = 14.333 c) F July = F June + α(A June - F June ) = 13 + 0.2(15-13) = 13 + 0.4 = 13.4 d) a = y – b x b = ( - * xy nx y ) / ( - ) x2 nx2 = x (1+2+3+4+5+6)/6 = 3.5 = y (12+11+15+12+16+15)/6 = 13.5
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This note was uploaded on 11/16/2009 for the course MGT 186 taught by Professor Zacharia during the Spring '08 term at Lehigh University .

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Assignment 2 - Assignment 2 6) The accuracy of a...

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