Question

Problem 3 You have realized that the sales for Select-A-Size Paper Towel packs have been increasing over the past year. You have learned that the double exponential smoothing method can account for such a trend in the data. Use double (trend-adjusted) exponential smoothing method to forecast sales for months 2 to 13, assuming S-1306 and T -15 and set a0.8 and -0.2 a. b. Plot the actual sales, the double exponential smoothing forecast, and the forecast obtained using simple exponential smoothing in Problem 2 with α-08 for months 2 to 12 on the same graph. Compute the MAD and MAPE for months 2 to 12 for the double exponential smoothing forecast and compare them with those from simple exponential smoothing in Problem 2(c). Based on your calculations, which approach is better in this particular case, single or double exponential smoothing? Explain. C. d. Develop a simple linear regression model using month as the independent variable to forecast the sales of Select-A-Size Paper Towel packs for month 13. Plot your regression forecasts along with your double exponential smoothing forecasts for months 2 through 13 on the same graph. Which one seems to capture the sales trend better? Briefly explain why.

excel spreadsheet information:

Month	Sales (in millions of boxes)
1	1306
2	1305
3	1311
4	1313
5	1324
6	1329
7	1346
8	1347
9	1378
10	1394
11	1441
12	1469

Answer 1

Answer:

The forecast, MAD, and MAPE are calculated in the following spreadsheet G H Sales (in millions Smoothing Forecast Absolute Deviation Absolute Percent Error 2 Month of а .6 1306 1306.0 | 1306.0 | 1306.0 1305.6 1305.4 1305.2 1307.8 1308.8 1309.8 1309.9 1311.3 1312.4 1315.5 1318.9 1321.7 1320.9 1325.0 1327.5 1330.9 1337.6 1342.3 1337.4 1343.2 1346.1 1353.61364.1 1371.6 1369.81382.0 1389.5 1398,3 14174 1430.7 α-.8 1306 1305 1311 1313 1324 1329 1346 1347 1378 1394 1441 1469 1306 1306 1.0 1.0 1.0 0.08% | 0.08% | 0.08% 0.41% | 0.43% | 0.44% 0.40% | 0.32% | 0.24% 1.07% | 0.96% | 0.88% 1.01% | 0.7696 | 0.5596 1.86% | 1.56% | 1.37% 1.19% | 0.70% | 0.35% 2.95% | 2.52% | 2.32% 2.90% | 2.15% | 1.61% 4.94% | 4.09% | 3.57% 4.82% | 3.51% | 2.61% 5.2 14.1 4.2 12.7 10.1 21.0 3.2 11.6 7.3 12 10 13 11 14 15 16 16.1 40.6 40.4 71.2 70.7 34.8 29.9 59.0 4.7 31.9 22.4 51.5 38.3 12 MAD 27.6 17.8 1.97% | 1.55% | 1.27% 18 19 21

EXCEL FORMULAS: ales (in Exp. Smoothing Foretast Menth mllios of 85903-13 123 09+1583-09) 04 dunsuī2-Dur04 u2.isultiaru。 -f 11. 2-112-ua Aastseu.DLİl_ Aas (SB1J-LJl-- AB2-1sutHu] |eus.stu -AVERAGEINAHALI-AVERAGEIA 04.1-AVERAGEIMU141 I-AVERAGE(LALA) Absolute Deviation 3 1306 5 54 1584-540.3 ABSİ SBS. FS) ABS SBS-D) 19 583 19/589 589-691 D ABS S830-014) I$810-F1 H11/31 H125812 H14/5814 12/s812 113 5813 114/5814 12/S812 113 14/5814 ABS SB12-012)EABS S812-12)ABSIS812-F1 ABS $834-014 15 MAPE AVERAGE HRHIAL AVERAGE 4 14LI-AVERAGEIA 14) AVERAGELAL14. AVERAGE(MANIAL AVERAGEMN14

Graph of actual sales vs the three Exp. smoothing forecast is following: Chart Title 1500 1450 1400 1350 1300 1250 10 12 -Sales (in millions of boxes) --Exp. Smoothing Forecast α-.4 Exp. Smoothing Forecast α-.6--Exp. Smoothing Forecast α-.8 Based on MAD and MAPE, forecast with alpha 0.8 is the most accurate.