The classified department of a monthly magazine has used a combination of quantitative and qualitative methods to forecast sales of advertising space. Results over a 20-month period are as follows:

Month Error 1 −8 2 −2 3 4 4 7 5 9 6 5 7 0 8 −3 9 −9 10 −4 11 1 12 6 13 8 14 4 15 1 16 −2 17 −4 18 −8 19 −5 20 −1

a. Compute a tracking signal for months 11 through 20. Compute an initial value of MAD for month 11, and then update it for each month using exponential smoothing with α = .1. What can you conclude? Assume limits of ± 4.

b. Using the first half of the data, construct a control chart with 2s limits. What can you conclude?

c. Plot the last 10 errors on the control chart. Are the errors random? What is the implication of this?

 LO.1