Ms. Kathleen Boyd, director of logistics for the Scenic Calendar Company, wishes to evaluate two methods of time series forecasting. She has collected quarterly calendar sales data from the years 2008 and 2009.
a. Use the moving averages technique to find forecasted sales for the third quarter of 2009 based on actual sales from the previous three quarters.
b. Use simple exponential smoothing to forecast each quarter's sales in 2009, given that Ms. Boyd qualitatively forecasted 900 calendars for quarter 4, 2008. Ms. Boyd has assigned an alpha factor of .1 for time series sensitivity.
c. Repeat the simple exponential smoothing problem above (part 5b) with Ms. Boyd employing an alpha factor of .2.
d. How well do the moving averages and simple exponential smoothing techniques seem to work in Ms. Boyd's situation? In what ways do the techniques appear to fail?