Reference no: EM131098580

Final Examination Review

1. Problem 1:The file Walmart Closing Prices, posted on Angel contains a little more than a year's worth of the daily closing values of Walmart's stock from 2003 and 2004. Use this data to develop a forecast for the day following the end of the data (October 16 2004.)

Use the following forecasting methods:

i) Moving average forecasting with a span of 3.
ii) Exponential Smoothing with a smoothing constant α=0.5.
Use a data table to give the Forecast for 10/16/2004,MAD and MSE as the smoothing constant in part ii) varies from α=0.1 to 0.6 in increments of 0.1.

Problem 2:

1. A contractor has found that her cost for a certain construction job is subject to random variation. She believes its actual value follows a continuous uniform distribution between $9000 and $11000 with a mean of $10,000. The cost to prepare her bid is $500. She is competing in a sealed bid competition with four other contractors. She believes that the bids submitted by the other contractors will vary triangularly with a minimum equal to her minimum cost, a most likely value equal to her 1.3 times her mean cost and a maximum equal to 2.5 times her mean cost and that their bids are independent of each other. She will win the competition if her bid is smaller than the bids of all four competitors. If she wins, her profit will be the difference between her bid and her cost minus the proposal preparation cost. If she loses her proposal preparation cost is lost and her profit is -$500.

Simulate 1000 bids in which her bid amount is $14,000 and determine the distribution of her profit. Include the histogram in your response. Also determine the probability that she wins the competition and the probability that she loses money. Compare these results for bid amounts of $13000 and $15000