Predict Inc., is using a simple exponential smoothing model to forecast their monthly sales but they...
Predict Inc., is using a simple exponential smoothing model to forecast their monthly sales but they are not sure of the best alpha value to use. They ran some computerized forecasts with different alpha values and reported the following. What alpha value should they use?
| alpha | 0.15 | 0.20 | 0.25 | 0.30 | 0.35 | 0.40 | 0.45 | 0.50 |
| MAD | 18.4 | 14.7 | 13.2 | 16.2 | 15.3 | 11.7 | 10.2 | 12.5 |
Group of answer choices
0.45
0.15
0.2
0.35
0.5
Homework Answers
1. A. 0.45
ALPHA 0.45 PROVIDES THE LOWEST MEAN ABSOLUTE DEVIATION VALUE AND THEREFORE, WE WILL PREFER IT.
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Examples 1,2,3
1. Beyond Tea Inc. wants to forecast sales of its menthol green
tea. The company is considering either using a simple mean or a
three-period moving average to forecast monthly sales. Given sales
data for the past 10 months use both forecasting methods to
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three-period moving average to forecast monthly sales. Given sales
data for the past 10 months use both forecasting methods to
forecast periods 7 to 10 and then evaluate each. Which method
should they use? Use the selected method to make a forecast for
month 11. (Show all calculations .... Please read Examples1, 2, 3...
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