The Fieldale Dairy produces cheese, which it sells to supermarkets and food processing companies. Because of concerns about cholesterol and fat in cheese, the company has seen demand for its products decline during the past decade. It is now considering introducing some alternative low-fat dairy products and wants to determine how much available plant capacity it will have next year. The company has developed an exponential smoothing forecast with ( = 0.40 to forecast cheese. The actual demand and the forecasts from its model are shown as follows

Assess the accuracy of the forecast model using MAD and cumulative error, and determine if the forecast error reflects bias using a tracking signal and ±3 MAD control limits. If the exponential smoothing forecast model is biased, determine if a linear trend model would provide a more accurate forecast.

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Demand (1000s lb) 16.8 14.1 5.3 12.7 11.9 12.3 11.5 10.8 Year Forecast 16.8 15.7 15.5 14.4 3.4 5 12.4