Question
The following are DVD sales ($) and amount of money spent on advertisement at a small music store over an 8month period. Month 1 2
The following are DVD sales ($) and amount of money spent on advertisement at a small music store over an 8month period.
Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
---|---|---|---|---|---|---|---|---|
Sales | 300 | 310 | 305 | 400 | 340 | 345 | 320 | 350 |
Ad spending | 45 | 55 | 50 | 65 | 62 | 60 | 55 | 55 |
(a) Compute a 4 months weighted moving average forecast for the data for the months 5 to 8 with weights2, 1.5, 0.4 and 0.1 (where 2 is the weight for the most recent data) as well as the mean square errors of theforecast. (b) Compute a forecast for months 1, 2 and 3 using exponential smoothing with smoothing constant = 0.2.Assume that the actual sales and forecast for month 0 is 305. (2 marks) (c) Develop a trend line for the data using the least squares method. What is the sales forecast for month 9 and10? Solve the problem using the formulas. Verify your trend line by using Excel Regression tool (attached the Excel output).
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