The manager of a travel agency has been using a seasonally adjusted forecast to predict demand for packaged tours. The actual and predicted values are as follows:

Period Demand Predicted 1 129 124 2 194 200 3 156 150 4 91 94 5 85 80 6 132 140 7 126 128 8 126 124 9 95 100 10 149 150 11 98 94 12 85 80 13 137 140 14 134 128

a. Compute MAD for the fifth period, and then update it period by period using exponential smoothing with α = .3.

b. Compute a tracking signal for periods 5 through 14 using the initial and updated MADs. If limits of ± 4 are used, what can you conclude?

 LO.1