Holding goods in inventory is costly because inventoried goods are susceptible to breakage and other forms of physical damage. Often, the amount of damage (in dollars) increases with the level of inventory (expressed in dollars), but some of the damage is unrelated to the amount of inventory. The following data show a companys inventory damage experience.

Period	Inventory Level (Millions of Dollars)	Damage (Thousands of Dollars)	Average Age of Inventory (Days)
1	$11	$80	31
2	$15	$90	45
3	$13	$70	98
4	$10	$60	15
5	$7	$50	25
6	$9	$70	31
7	$13	$80	82
8	$14	$65	72
9	$10	$70	50
10	$12	$60	45

You are interested in developing a forecast for the Inventory for period 11. Provide your forecasts to one decimal place ($xx.x).

a) Develop a 4-period moving average, a 3-period weighted moving average forecast, and an exponential smoothing forecast for period 11. For the weighted moving average, the weights should be 0.6 and 0.3 for the most recent and next most recent periods. The sum of the weights for the three periods should be consistent with the method we have studied in class. For the exponential smoothing method, let the starting forecast for period 4 be 14.0 and let = 0.3. Provide the forecasts for period 11.

b) Of these three forecasting methods, which appears to be the best method based on the forecasting results for periods 7 through 10? Selecting a method because it is easy is not acceptable. Your results must be analytically based on the forecasts results from periods 7 through 10 and using one of the evaluation methods we have learned and used in our weekly homework assignments.