Ms. Kathleen Boyd, director of logistics for the Scenic Calendar Company, wishes to evaluate

two methods of time series forecasting. She has collected quarterly calendar sales data from the

years 2003 and 2004.

2003 . 2004

Qtr. Actual Sales Qtr. Actual Sales

1 1200 1 1300

2 800 2 800

3 200 3 250

4 1000 4 1200

a.Use the moving averages technique to find forecasted sales for the third quarter of 2009 based on actual sales from the previous three quarters. (0,5p)

b. Use simple exponential smoothing to forecast each quarters sales in 2009, given that Mr. Clayton qualitatively forecasted 800 calendars for quarter 4, 2008. Mr. Clayton has assigned an alpha factor of 0,1 for time series sensitivity. (0,5p)

c. Repeat the simple exponential smoothing problem above (part 5b) with Mr Clayton employing an alpha factor of 0,8. (0,5p)

d. How well does the moving averages and simple exponential smoothing techniques seem to work in Mr. Claytons situation? In what ways do the techniques appear to fail? Explain. (0,5p)