The Olympia Paper Company, Inc., makes Absorbent Paper Towels. The company would like to develop a prediction

Question:

The Olympia Paper Company, Inc., makes Absorbent Paper Towels. The company would like to develop a prediction model that can be used to give point forecasts and prediction interval forecasts of weekly sales over 100,000 rolls, in units of 10,000 rolls, of Absorbent Paper Towels. With a reliable model, Olympia Paper can more effectively plan its production schedule, plan its budget, and estimate requirements for producing and storing this product. For the past 120 weeks the company has recorded weekly sales of Absorbent Paper Towels. The 120 sales figures, y1,y2....,y120 are given in Table 16.22, and the MINITAB output resulting from using simple exponential smoothing to forecast future values of the sales figures is given in Figure 16.30, on the next page. Note that MINITAB chooses a smoothing constant of 1.35442, which is not (as is the usual case) between 0 and 1. In general, if the trend effects in a time series are changing fairly quickly (as the plot of the sales values in Figure 16.30 indicates is true) MINITAB will often choose a smoothing constant greater than 1. Use the MINITAB output to find a point forecast of and a 95 percent prediction interval for the number of rolls of Absorbent Paper Towels that will be sold in a future week.

Data from Table 16.22