A cheque processing centre uses exponential smoothing to forecast the number of incoming cheques each month. The number of cheques received in June was 40 million, while the fore- cast was 42 million. A smoothing constant of .2 is used.
a) What is the fore cast for July?
b) If the centre received 45 million cheques in July, what would be the forecast for August?
c) Why might this be an inappropriate forecasting method for this situation? PX