Essay Quantative Methods
| |Estimated Profits …show more content…
Maximum profits would be derived from construction of the large facility, which based on calculations will provide the best expected value.
2. Consulting income at Kaplan Associates for the period February – July has been as follows:
|Month |Income ($1,000) |
|February |70.0 |
|March |68.5 |
|April |64.8 |
|May |71.7 |
|June |71.3 |
|July |72.8 |
Use Exponential smoothing to forecast August income. Assume that the initial forecast for February is $65,000. The smoothing constant should be α = 0.1.
1. Appropriate Technique
Exponential smoothing is a form of weighted moving average where the most current data is weighted the most and a smoothing constant is subjectively chosen, based on knowledge and experience.
2. Application of the technique and Evidence
Based on calculations