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5. [20 points] Sales of copy paper reems (in thousands) in a copy shop chain is as follows: Month Jan Feb Mar Apr May
5. [20 points] Sales of copy paper reems (in thousands) in a copy shop chain is as follows: Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sales 51 55 54 57 50 68 66 59 67 69 75 73 The procurement managers are trying to choose a good forecasting model for forecasting the demand. They are considering Single Exponential Smoothening (SES) method as the forecasting model. One manager suggested that a value should be 0.3 and another experienced manager suggested that a value should be 0.8. They decided to test the a values by comparing the Mean Square Error (MSE) for each a value. Help the managers to decide which a value is better for SES model. (Hint: calculate SES forecast values for a = 0.3 and a = 0.8. Then calculate MSE value for each a value). (Show all calculations. A non-analytical discussion is not acceptable as the answer).
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