Sara Lee Corp maker of food beverage and household products
Sara Lee Corp., maker of food, beverage, and household products, is known especially for its baked products, marketed under its corporate name. For the five years ending July 1 of each year from 2002 to 2006, their bakery division reported the following profits.
Fiscal Year Profits ($ M)
2002 ......... 97
2003 ......... 98
2004 ......... 156
2005 ......... – 4
2006 ......... – 197
a) Use a 4- year moving average to predict profits for 2007.
b) Predict the profits for 2007 using a single exponential smooth with smoothing parameter α = 0.5.
c) Think about the exponential smoother. If the parameter were 0.8 would you expect the prediction to be higher or lower? What if it were 0.2? Explain.
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