Refer to given Exercise. Construct an exponentially weighted moving-average chart using a weighting constant of 0.2 for the weekly amount invested. Comment on the process. If it is desired to have a goal value of $1.5M for the standard deviation, using the constructed chart, comment on the ability of the process to achieve this goal.
Exercise
An investment bank is interested in monitoring the weekly amount (in millions of dollars) invested in volatile stocks so as to maintain a stable rate of return on a selected fund. Table 7-31 shows 25 consecutive weeks of the amount invested ($M) in the fund. Construct appropriate control charts and comment on the stability of investment. Revise the chart, if necessary, assuming special causes for out-of-control points. What is your estimate of the standard deviation of the weekly amount invested?
