Determine which smoothing constants provide better forecast

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Reference no: EM131353501

Resolve Problem with α = .1 and β = .8. Using MSE, determine which smoothing constants provide a better forecast.

Problem - Income at the architectural firm Spraggins and Yunes for the period February to July was as follows:

MONTH	FEBUARY	MARCH	APRIL	MAY	JUNE	JULY
Income (in $ thousand)	70.0	68.5	64.8	71.7	71.3	72.8

Use trend-adjusted exponential smoothing to forecast the firm's August income. Assume that the initial forecast average for February is $65,000 and the initial trend adjustment is 0. The smoothing constants selected are α = .1 and β = .2.

Reference no: EM131353501

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