Question
Use the Holt's approach. 1.Determine the best value of alpha and gamma, for the MAE criterion. 2.For the model you obtained in question '5' using
Use the Holt's approach.
1.Determine the best value of alpha and gamma, for the MAE criterion.
2.For the model you obtained in question '5' using the optimal alpha and gamma, you should get L25 =1766.89, and T25 =66.88.Which statement is correct?
a.The local slope is L25/T25 = 1766.89/66.88 = 26.42
b.The intercept (namely, the time series at t=0) is estimated to be 1766.89 as of t=25
c.The average slope at t=25 is 66.88/25.
d.At t=25 the monthly loan is estimated to rise by 66880 dollars per month.
3.Use L25 =1766.89 andT25 = 66.88 from the template of the model you obtained in question '5' to calculate the forecast of loans for months 26, 27, and 28.
Show your calculations.
As a matter of policy, management will approve borrowing up to a total of $1,900,000 for next month (month 26). How confident can management be that this loan amount will be sufficient to purchase the merchandise required that month? You can use trial and error, or goal seek with the template.
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