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The manager of a travel agency has been using a seasonally adjusted forecast to predict demand for packaged tours. The actual and predicted values are as follows:
Period |
Demand |
Predicted |
1 |
129 |
124 |
2 |
194 |
200 |
3 |
156 |
150 |
4 |
91 |
94 |
5 |
85 |
80 |
6 |
132 |
140 |
7 |
126 |
128 |
8 |
126 |
124 |
9 |
95 |
100 |
10 |
149 |
150 |
11 |
98 |
94 |
12 |
85 |
80 |
13 |
137 |
140 |
14 |
134 |
128 |
a. Compute MAD for the fifth period, then update it period by period using exponential smoothing with a = .3.
b. Compute a tracking signal for periods 5 through 14 using the initial and updated MADs. If limits of ± 4 are used, what can you conclude?
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