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The operations manager of a manufacturing firm concerns about the sales performance of a particular product in the near future after looking at the historical data. The yearly sales revenues during the last three-year period are provided by the marketing people as follows:
Year
Sales Revenue (thousand $)
1
125.4
2
148.2
3
151.6
a. What is the forecast for the 4th year's sales revenue by using linear trend method?
b. What is the forecast for the 4th year's sales revenue by using double exponential smoothing method with a = 0.4 and b = 0.2 (start with initial estimates S1 = 126 and T1 = 10 for the 1st year)?
c. Based on MAD over the time period of the 2nd and the 3rd years, which method among the above two in Q18 and q19, provides a better forecast?
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