Which is better the 2 month average or the 3 month average

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Reference no: EM13838704

Dell uses the CR5 chip in some of its laptop computers. The prices for the chip during the past 12 months were as follows:

Month	Price Per Chip	Month	Price Per Chip
January	$1.80	July	1.80
February	1.67	August	1.83
March	1.70	September	1.70
April	1.85	October	1.65
May	1.90	November	1.70
June	1.87	December	1.75

a) Use a 2-month moving average on all the data and plot the averages and the prices.

b) Use a 3-month moving average and add the 3-month plot to the graph created in part (a).

c) Which is better (using the mean absolute deviation): the 2-month average or the 3-month average?

d) Compute the forecasts for each month using exponential smoothing, with an initial forecast for January of $1.80. Use %u03B1 = .1, then %u03B1 = .3, and finally %u03B1 = .5. Using MAD, which %u03B1 is the best?

Reference no: EM13838704

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