The Easyfit tire store had demand for tires shown below. Split the data into two equal parts of seven days each. Assume F1 = 198.
a. Develop a spreadsheet using the first seven days of demand to determine the best exponential smoothing model for values of α = .2, α = .3, and α = .4. Select the model with the smallest absolute deviation for seven periods.
b. Develop another spreadsheet using the hold out sample for the second seven days to com pare the best exponential smoothing model found in part a with a three-period moving average model. Compare the predictions on the basis of the total absolute deviation for the second seven periods.
c. What principles does this problem illustrate?

Transcribed Image Text:

Day 0 Demand Day Demand 200 209 215 180 190 195 200 208 186 193 197 188 191 196 10 12 13 14