Smoothing and the smoothing constant

Reference no: EM13995483

1. The U.S. trade deficit with Canada (billions of dollars) from 2000 through 2007 is reported as shown in the table. Using exponential smoothing and the smoothing constant a = 0.7, what deficit would have been forecast for 2008? Source: World Almanac and Book of Facts 2009, p. 117.

Year: 2000 2001 2002 2003 2004 2005 2006 2007

Deficit: $51.9 52.8 48.2 51.7 66.5 78.5 71.8 68.2

2. For the data of Exercise 18.7, use the weighting constant a = 0.5 and exponential smoothing to determine the forecast for 2008.

3. For the data of Exercise 18.9, use the weighting constant a = 0.6 and exponential smoothing to determine the forecast for 2008.

4. If a time series is such that sales are consistently increasing from one year to the next, will exponential smoothing tend to produce forecasts that are (a) over or (b) under the sales that are actually realized for the forecast period? Why?

Reference no: EM13995483

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