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Forcasting techniques 9.1 and 9.3 exercises

# Forcasting techniques 9.1 and 9.3 exercises - Exercise 9.1...

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Exercise 9.1 The following data represent total personnel expenses for the Palmdale Human Service Agency for past four fiscal years: 20X1 \$5,250,000 20X2 \$5,500,000 20X3 \$6,000,000 20X4 \$6,750,000 Forecast personnel expenses for fiscal year 20X5 using moving averages, weighted moving averages, exponential smoothing, and time series regression. For moving averages and weighted moving averages, use only the data for the past three fiscal years. For weighted moving averages, assign a value of 1 to the data for 20X2, a value of 2 to the data for 20X3, and a value of 3 to the data for 20X4. For exponential smoothing, assume that the last forecast for fiscal year 20X4 was \$6,300,000. You decide on the alpha to be used for exponential smoothing. For time series regression, use the data for all four fiscal years. Which forecast will you use? Why? Moving Averages Fiscal Year Expenses 20X2 \$5,500,000 20X3 \$6,000,000 20X4 \$6,750,000 20X2-4 \$18,250,000 20X5 \$18,250,000/3 = \$6,083,333 Weighted Averages Fiscal Year Expenses Weight Weighted Score 20X2 \$5,500,000 1 \$5,500,000 20X3 \$6,000,000 2 \$12,000,000 20X4 \$6,750,000 3 \$20,250,000 6 \$37,750,000 20X5 \$37,750,000/6 = \$6,291,667 Exponential Smoothing Given: Last Forecast (LF) = \$6,300,000 Last Data (LD) = \$6,750,000 α = 0.95 I used the 0.95 alpha because I strongly believe that the new forecast will be based on the last

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Forcasting techniques 9.1 and 9.3 exercises - Exercise 9.1...

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