Question: Develop a double exponential smoothing model using smoothing constants = 0.20 and = 0.40. As starting values, use the least squares trend line
a. Compute the MAD for this model.
b. Plot the forecast values against the actual data.
c. Use the same starting values but try different smoothing constants, say, [(α , β) = (0.10, 0.50), (0.30, 0.30), and (0.40, 0.20)] in an effort to reduce the MAD value.
Refer to Malcar Autoparts Company, which has started producing replacement control micro-computers for automobiles. This has been a growth industry since the first control units were introduced in 1985. Sales data since 1994 are as follows:
Year Sales($)
1994…………………240,000
1995…………………218,000
1996…………………405,000
1997…………………587,000
1998…………………795,000
1999…………………762,000
2000…………………998,000
2001……………….1,217,000
2002……………….1,570,000
2003……………….1,947,000
2004……………….2,711,000
2005……………….3,104,000
2006……………….2,918,000
2007……………….4,606,000
2008……………….5,216,000
2009……………….5,010,000
Step by Step Solution
There are 3 Steps involved in it
Use Equations 1618 19 20 and followthe steps outlined in Example 157 a Thestarting values 89127000 and 34238529 for this model are determinedusing sim... View full answer
Get step-by-step solutions from verified subject matter experts
