Question

Income at the architectural firm Spraggins and Yunes for the period February to July was as follows:                                                          

Month	February	March	April	May	June	July
Income​ ($000's)	75	71.5	66.4	72.3	73.5	74

Assume that the initial forecast for February is 70 ​(in $​ thousands) and the initial trend adjustment is 0. The smoothing constants selected are alpha (α) ​= 0.1 and beta (β) ​= 0.3

1) Using​ trend-adjusted exponential​ smoothing, the forecast for the architectural​ firm's August income is _______ thousand dollars ​(round your response to two decimal​ places).

2) Compute the MSE for the forecast developed using​ trend-adjusted exponential smoothing. ​(Round your response to two decimal​ places.)

Answer 1

1)Using trend-adjusted exponential smoothing,the forecast for the architectural firm's August income is 71.50 thousands dollars
2)MSE for the forecast developed using trend-adjusted exponential smoothing is 12.89
F=Forecast=FIT(previous)+alpla*(actual-FIT(previous))
T=Trend=Trend(previous)+beta*(F(current)-FIT(previous))
FIT=Forecast including Trend=F+T
Error=actual-F ; Sq. error=Squared Error=Error*Error
SSE=Sum of square of Error
MSE=Mean Square Error=SSE/n