Aarthi Medicals, a fictitious company, has been monitoring the sales of a health drink for diabetics. As the demand for the health drink has been steadily increasing, the owner of the store, Nicole Carter, wants to develop good forecasts for this product to determine how many cases of this drink to order every week from the manufacturer. Nicole has compiled the demand data shown in the accompanying table for the past 12 weeks. Nicole wants to evaluate forecasts using the exponential smoothing method using smoothing constants values of α₁= 0.20 and α₂= 0.40.

1. Assuming a forecast for week 2 of 48 cases (F₂ = 48), generate forecasts for weeks 13 to 15 using exponential smoothing for both values of the smoothing constant (α₁ = 0.20 and α₂ = 0.40).

2. Compute the forecast error measures of MAD and MSE and determine which value of the smoothing constant provides more accurate forecasts.

Transcribed Image Text:

Week Demand in Cases Week Demand in Cases 48 52 48 1 46 55 3 49 35 54 10 4 47 58 11 53 12 57 2. LC