The quarterly data presented here show the number of appliances (in thousands) returned to a particular manufacturer for warranty service over the past five years.

a. Develop an exponential smoothing forecast model, with alpha = 0.6 for the data. Forecast returns for each quarter of the current year. 

b. Develop a linear trend line forecast for each of the four quarters and forecast returns for each quarter of the current year. 

Which of the two approaches appear to be most accurate? 
 

Transcribed Image Text:

Year 5 year ago 4 year ago 3 year ago 2 year ago 1 year ago Quarter 1 2 3 412 3 4 1 23 2 3 4 1 2 3 4 1 2 3 4 Returns 1.2 0.9 .7 1.0 1.7 1.2 1.1 1.4 3.1 3.4 3.5 3.3 2.6 2.2 1.9 2.5 2.7 2.6 2.3 3.0 Year 5 year ago 4 year ago 3 year ago 2 year ago 1 year ago Quarter 1 2 3 412 3 4 1 23 2 3 4 1 2 3 4 1 2 3 4 Returns 1.2 0.9 .7 1.0 1.7 1.2 1.1 1.4 3.1 3.4 3.5 3.3 2.6 2.2 1.9 2.5 2.7 2.6 2.3 3.0

Answer rating: 100% (QA)

Solution Here are the forecasts using exponential smoothing and linear trend models a Exponential sm... View the full answer