A check-processing center uses exponential smoothing to forecast the number of incoming checks each month. The number of checks received in June was

38

million, while the forecast was

41

million. A smoothing constant of

0.25

is used.

a) Using exponential smoothing and given

,

the forecast for the month of July =

enter your response here

million checks received (round your response to one decimal place).

b) If the check-processing center received

44

million checks in the month of July, then using exponential smoothing and given

,

the forecast for the month of August =

enter your response here

million checks received (round your response to one decimal place).

c) Exponential smoothing may not be an appropriate method to use for the check-processing center because:

A.

the check-processing center's forecast is very hard to make as its processing requirements should have a very high variability.

B.

the check-processing center should observe a cyclical trend in its processing requirements.

C.

the check-processing center should observe seasonality in its processing requirements.

D.

the check-processing center should observe an increasing trend in its processing requirements.