The table below shows quarterly sales of a product from 2011 to 2015. The company wants to make a sales forecast for Q1 of 2016. Consider the following methods:

- Six-period moving average
- Simple exponential smoothing, alpha = 0.8 and initial estimate of $14.81 millions
- Linear regression with trend and binary variables for seasonality

Year	Quarter	Sales ($ million)
2011	Q1	14.81
2011	Q2	14.49
2011	Q3	14.87
2011	Q4	14.81
2012	Q1	14.54
2012	Q2	14.40
2012	Q3	14.59
2012	Q4	14.95
2013	Q1	14.70
2013	Q2	14.65
2013	Q3	14.40
2013	Q4	14.45
2014	Q1	14.81
2014	Q2	14.47
2014	Q3	15.07
2014	Q4	14.79
2015	Q1	14.45
2015	Q2	14.48
2015	Q3	14.81
2015	Q4	14.64

Question 1: Which method should be used? Why?
Question 2: Based on your answer in part A), what is the sales prediction for Q1, 2016?
Question 3: How accurate do you expect the forecast in part B) to be? Use appropriate measure(s) to support your answer.

Answer rating: 100% (QA)

Formula for expnonential smoothing Ft1 08At 108Ft Year Quarter Sales 6 MA Sq Er exp08 Sq Er million ... View the full answer