Two experienced managers at Wilson Boat, Inc. are resisting the introduction of a computerized exponential smoothing system, claiming that their judgmental forecasts are much better than any computer could do. Their past record of predictions is as follows:
Week Actual Demand Manager’s Forecast
1 4,000 4,500
2 4,200 5,000
3 4,200 4,000
4 3,000 3,800
5 3,800 3,600
6 5,000 4,000
7 5,600 5,000
8 4,400 4,800
9 5,000 4,000
10 4,800 5,000
a. How would the manager’s forecast compare to a single exponential smoothing forecast using a = 0.4?
b. Based on whatever calculations you think appropriate, are the manager’s judgmental forecasts performing satisfactorily?
c. What other criteria should be used to select a forecasting method for this company?