Resolve Problem 4.19 with α = .1 and β = .8. Using MSE, determine which smoothing constants provide a better forecast. In Problem 4.19, Income at the law firm Smith and Wesson for the period February to July was as follows:
Use trend-adjusted exponential smoothing to forecast the law firm’s August income. Assume that the initial forecast for February is $65,000 and the initial trend adjustment is 0. The smoothing constants selected are α = .1 and β =.2.