The Ace Trucking Company must determine the number of drivers and trucks to have available on a weekly basis. The standard schedule is to send drivers over the pickup and delivery route on Monday and return them to the originating point on Friday. The trucking requirements can be determined from the total volume to be moved for the week; however, they must be known a week in advance for planning purposes. The volume for the last ten weeks is given here:

a. Using the simplest (level only) exponential smoothing model, predict the expected volume for the next week. [You will need to estimate an exponential smoothing constant (α) that will minimize the forecast error. Use the four oldest weeks of data to start the forecast process, that is, find F0, and search for α in increments of 0.1.]
b. Estimate the forecast error (SF). Use the last six weekly periods.
c. Find the range over which the actual volume is likely to vary.
 

Week Volume Week Volume 10 weeks ago 2,056,000 5 weeks ago 2,268,000 9 2,349,000 4 2,653,000 8. 1,895,000 3 2,039,000 1,514,000 2,399,000 2,508,000 2 6. 1,194,000 1 (this week)