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Goodyear Tire and Rubber Company is the ninth largest tire manufacturer in the world. Here are the sales revenues for the past five years:
Year
Revenue (millions)
1
$4,877.9
2
5,065.4
3
5,525.6
4
5,729.8
5
5,499.7
a. When might a manager prefer linear trend/double exponential smoothing techniques to moving average/exponential smoothing techniques and why?
b. Based on MAD over the period of the last three years (years 3, 4, and 5), which method (linear-trend or double-exponential smoothing method with a = 0.4 and b = 0.2 (start with initial estimates S1 = $4,867.90 and T1 = $201.5 for year 1)) provides the better forecasts? Explain. Then, use your selected forecasting method, forecast the revenue for year 6 and year 7.
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