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QUARTER/YEAR ACTUAL NUMBER OF USERS IN MILLIONS FORECASTED DEMAND2-QUARTER MOVING AVERAGE ABSOLUTE FORECAST ERROR FORECASTED DEMAND3-QUARTER MOVING AVERAGE ABSOLUTE FORECAST ERROR EXPONENTIAL SMOOTHING WITH SMOOTHING

QUARTER/YEAR

ACTUAL NUMBER OF USERS IN MILLIONS

FORECASTED DEMAND—2-QUARTER MOVING AVERAGE

ABSOLUTE FORECAST ERROR

FORECASTED DEMAND—3-QUARTER MOVING AVERAGE

ABSOLUTE FORECAST ERROR

EXPONENTIAL SMOOTHING WITH SMOOTHING CONSTANT OF 0.2

ABSOLUTE FORECAST ERROR

EXPONENTIAL SMOOTHING WITH SMOOTHING CONSTANT OF 0.9

ABSOLUTE FORECAST ERROR

Q1/2010

30









Q2/2010

40









Q3/2010

49









Q4/2010

54









Q1/2011

68









Q2/2011

85









Q3/2011

101









Q4/2011

117









Q1/2012

1A. Forecast demand using the two-quarter moving average and the three-quarter moving average.

1B. Forecast demand using exponential smoothing, one with the smoothing constant of 0.2 and the other with a smoothing constant of 0.9. Note: Set the forecast for Q1/2010 equal to the demand level for Q1/2010.

1C. Calculate the mean absolute deviation (MAD) of each forecasting method. Which forecasting method would you recommend Alvin Ortega use? Explain why.






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