Refer to Exercise 7-49. Construct an exponentially weighted moving-average chart using a weighting constant of 0.2 for the weekly amount invested. Comment on the process. If it is desired to have a goal value of $1.5M for the standard deviation, using the constructed chart, comment on the ability of the process to achieve this goal.

Exercise 7-49

An investment bank is interested in monitoring the weekly amount (in millions of dollars) invested in volatile stocks so as to maintain a stable rate of return on a selected fund. Table 7-31 shows 25 consecutive weeks of the amount invested ($M) in the fund. Construct appropriate control charts and comment on the stability of invest­ ment. Revise the chart, if necessary, assuming special causes for out-of-control points. What is your estimate of the standard deviation of the weekly amount invested?

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TABLE 7-31 Weekly Investment in Volatile Stocks Week Investment (SM) Week Investment (SM) Week Investment (SM) 1 16.2 10 12.9 19 16.3 10.8 11 28.5 20 14.2 3 18.9 12 23.3 21 21.5 4 14.4 13 20.2 22 18.6 15.7 25.3 19.3 14.8 5 14 23 20.9 6. 15 24 22.4 7 20.4 16 18.7 25 21.8 8 22.6 17 20.4 9 17.8 18 21.2