Question: BtA company is considering what forecasting method to use for coming time periods. The company has used something of a qualitative is (consensus-based) forecasting method in the past, and is wanting to know if a formal, quantitative forecasting method would be appropriate for them. Consider the following data from recent time periods:
Time Period Forecast Actual Demand
Three quarters ago 225 230
Two quarters ago 240 270
Last quarter 275 295
This quarter You will determine ?
Briefly address each of the following bullets:
. Discuss what method of forecasting you view to be most appropriate given the data given above. Explain why you believe your chosen forecasting method to be the most appropriate.
. Select an appropriate value for alpha, and calculate an exponential smoothing forecast for this quarter. Discuss the relationship between the alpha value that you selected and the forecast value that you calculated. In other words, if you had selected a lower value for alpha, how would the calculated value be different, and if you had selected a higher value for alpha, how would the calculated value be different?
Assume that, at the end of this quarter, we could report that the demand for this quarter was actually 275 (just like last quarter). Would this information cause you to rethink the alpha value that you select? If so, how would it impact the value that you would have selected for alpha?