Question: A check-processing center uses exponential smoothing to forecast the number of incoming checks each month. The number of checks received in June was 42 million, while the forecast was 43 million. A smoothing constant of 0.20 is used.
1) Using exponential smoothing and given a , the forecast for the month of July = _______ million checks received (round your response to one decimal place).
2) If the check-processing center received 44 million checks in the month of July, then using exponential smoothing and given a , the forecast for the month of August = ________ million checks received (round your response to one decimal place).
3) Exponential smoothing may not be an appropriate method to use for the check-processing center because:
A. the check-processing center should observe an increasing trend in its processing requirements.
B. the check-processing center's forecast is very hard to make as its processing requirements should have a very high variability.
C. the check-processing center should observe seasonality in its processing requirements.
D. the check-processing center should observe a cyclical trend in its processing requirements.