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# Statistics work best over a long tenure where

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Statistics work best over a long tenure, where recurring differences normalize, and business conditions remain unchanged. Market environment conditions and industry specific trends are not projected statistically. Judgmental forecasting depends on human knowledge to foresee future commercial needs. This could be contributions from sales managers identifying business development or a production manager predicting resource needs. Reliant on people’s input, this type of forecasting can either be very precise or largely off-base. Nevertheless, human perception fits the flexibility required for short-range analysis, accompanied by the intuitive factors that industries in rapidly changing environments necessitate. Practically speaking, forecasting needs combines fundamentals of both strategies. When basing data on preceding periods and apply approximations for future performance, your analysis is both statistically and judgmentally. A cyclical business might suffer in a specific period because of bad climatic conditions, and the manager will align resources, accounting for the arrival of normalized climate conditions that are favourable to his business. Similarly, applying the views of the sales team to statistical data might account for variations in demand.

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11 2.5.3 a) Calculate the three-period moving-average forecasts for August and September. (2) F4= 42+40+41/3= 41.00 F5= 40+41+39/3= 40.00 b) Calculate the single exponential smoothing forecasts (wit h α of 0.4) for August and September. Assume that the forecast for the July period is 40. (2) F4 = 0.4(41) + 0.6(40) = 40.40 F5 = 0.4(39) + 0.6(40.40) = 39.84
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