Essay Quantative Methods

1196 Words May 3rd, 2015 5 Pages
1. Modern Electronics specializes in manufacturing modern electronic components. It also builds the equipment that produces the components. Modern Electronics is considering building a new facility but the estimated profits would be impacted by the type of market that develops. The probability for a strong market is 0.3; for a fair market is 0.5; and for a poor market is 0.2. You are responsible for advising the president of Modern Electronics on the type facility that should be built or to not build a facility at all. The table shows the estimated profits under each market and for each size facility.

| |Estimated Profits
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2. Application of the technique and Evidence

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3. Conclusion

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

3. Conclusion

Based on calculations

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