Problem:
The Jersey Dairy Products Company produces cheese, which it sells to supermarkets and food processing companies. because of concernes about cholesterol and fat in cheese, the company has seen demad for its products decline during the past decade. It is now considering introducint some alternative low fat dairy products and wants to determine how much available plant capacity it will have next year. The company has developed an exponential smoothing forecast with a=.40 to foecast cheese demand. The actual demand and the forecasts from the model are as follows.
Year Demand(1,000 lb) Forecast
1 16.8 -
2 14.1 16.8
3 15.3 15.7
4 12.7 15.5
5 11.9 14.4
6 12.3 13.4
7 11.5 12.9
8 10.8 12.4
Access the accuracy of the forecast model by using MAD and cumulative error. If the exponential smoothing forecast model does not appear to be acurate, determine whether a linear trend moldel would provide a more accurate forecast