Observed monthly sales of a popular brand tennis shoe at a medium-sized sports store at the town's mall over the first six months of the year are given in the following table.
|
Month
|
Jan
|
Feb
|
Mar
|
Apr
|
May
|
June
|
July
|
Aug
|
|
Demand
|
26
|
30
|
33
|
45
|
36
|
40
|
38
|
42
|
a) Use a three-month moving average method to forecast the sales for the months April through September. Also compute the mean squared error (MSE) based on the sales and forecasts for months April through August.
b) If the forecast for January was 25, determine the forecast for sales for the months February through September using an exponential smoothing method with a= 0.60. Also compute the mean squared error (MSE) based on the sales and forecasts for months April through August.
c) Which method would you recommend based on MSE? Why?