Question
Goodyear Tire and Rubber Company is the ninth largest tire manufacturer in the world. Here are the sales revenues for year 1 through year 5:
Goodyear Tire and Rubber Company is the ninth largest tire manufacturer in the world. Here are the sales revenues for year 1 through year 5:
Year | Revenue (millions) |
1 | $3,889.9 |
2 | 4,066.4 |
3 | 4,535.6 |
4 | 4,731.8 |
5 | 4,498.7 |
a.When might a manager prefer linear trend technique to simple moving average technique? Explain your answer.
b. Based on MAD for from year 3 to year 5, which method (linear-trend or double exponential smoothing method with a = 0.4 and b = 0.2 (start with initial estimates S1 = $4,867.90 and T1 = $201.5 for the year 1)) provides the better forecasts? Explain. Forecast the sales revenue for year 6 and year 7 based on your preferred method
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