Midterm_2__2008_Solutions - IEOR 150 Midterm II (Fall 08)...

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IEOR 150 Midterm II (Fall 08) Name: Daphne Student ID #: 1. Observations of the monthly demand of a particular brand of coffee maker at a retail store is the following: Month Demand Jan 200 Feb 250 Mar 175 Apr 186 May 225 (a) What were the one-step-ahead forecasts of demand for these five months using exponential smoothing with 0.15 α = (assume the forecast for Jan was 200 to get started). (4 points) 1 21 1 32 2 43 3 54 4 200 (1 ) 200 ) 207.5 ) 202.625 ) 200.131 F FD F F F F αα = =+ = = = = (b) If we use 0.35 = instead of 0.15 = , do you expect the forecasts to be more stable or more unstable than what you get in (a)? Please explain. (3 points) The variance will become bigger because we put more weight on the actual demand by increasing , and the actual demand exhibits higher variance than the forecasts. (c) Keep 0.15 = , what is the forecast of demand in August (forecast made at the end of May)? (2 points) One step-ahead and multiple-step-ahead forecasts are the same: 85 5 ) 203.86 F = (d) Give a one-or-two-sentence explanation of why the method is called “exponential smoothing”. (1 point) The exponential smoothing applies a declining set of weights to all past data, and we could fit the continuous exponential curve to these weights.
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2. The table below records the quarterly demand of a kind of purse at a small
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Midterm_2__2008_Solutions - IEOR 150 Midterm II (Fall 08)...

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