Ben Swanson, owner and manager of Swanson's Department Store, has decided to use statistical forecasting...

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Accounting

Ben Swanson, owner and manager of Swanson's Department Store, has decided to use statistical forecasting to get a better handle on the demand for his major products. However, Ben now needs to decide which forecasting method is most appropriate for each category of product. One category is major household appliances, such as washing machines, which have a relatively stable sales level. Monthly sales of washing machines last year are shown below.

Month Sales
January 23
February 24
March 22
April 28
May 22
June 27
July 20
August 26
September 21
October 29
November 23
December 28

Click here for the Excel Data File

Ben Swanson now has decided to use the exponential smoothing method to forecast future sales of washing machines, but he needs to decide on which smoothing constant to use. Using an initial estimate of 24, apply this method retrospectively to the 12 months of last year with = 0.1, 0.2, and 0.5.

Compare MAD for these three values of the smoothing constant . Then do the same with MSE.

Note: Round your answers to 1 decimal place.

image \begin{tabular}{|l|c|c|c|} \hline & =0.1 & =0.2 & =0.5 \\ \hline MAD & & & \\ \hline MSE & & & \\ \hline \end{tabular}

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