Question

In: Operations Management

Drew works at Baseball Inc., a seller of high-quality baseballs. He is interested in forecasting demand...

Drew works at Baseball Inc., a seller of high-quality baseballs. He is interested in forecasting demand for his baseballs that are sold weekly to University of Miami using exponential smoothing.

Assume an initial forecast of 175 and the demand data below:

Week

Demand

Forecast

1

180

175

2

168

3

159

4

175

You want to use simple exponential smoothing. In case 1 you take alpha = 0.7 and in case 2 you take alpha = 0.3. Which of the following has an acceptable tracking signal, i.e., model does not need to be re-evaluated?

Answer Options:

  1. Case 1
  2. Case 2
  3. Both Case 1 and Case 2
  4. Neither Case 1 and Case 2

Solutions

Expert Solution

Answer: Both Case 1 and Case 2

Explanation:

Forecast:

RSFE = Cumulative sum of forecast error

|Forecast Error| = Absolute Forecast Error

Cumulative Error = Cumulative Sum of Error

In both Case Tracking single is in the range of threshold TS (-3.75,3.75) so both model have an acceptable Tracking signal and don't need to be re-evaluated.

keosha answered 2 weeks ago
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