Table 108
a Manager Wants to Forecast the Monthly Demand
for

question 89

Multiple Choice

Table 10.8
A manager wants to forecast the monthly demand
for a machine the company produces.
$$\begin{array} { | c | c | } \hline \text { Month } & \begin{array} { c } \text { No. Machines } \\\text { Sold }\end{array} \\\hline 1 & 50 \\2 & 65 \\3 & 52 \\4 & 56 \\5 & 55 \\6 & 60 \\\hline\end{array}$$
-The management of a company specializing in securities analysis has been using two forecasting methods to follow a new stock issue.
Forecast Method
$$\begin{array} { | c | c | c | c | } \hline \text { Month } & \begin{array} { c } \text { Exponential } \\\text { Smoothing }\end{array} & \text { Judgmental } & \begin{array} { c } \text { Actual } \\\text { Price }\end{array} \\\hline 1 & 48 & 50 & 51 \\2 & 50 & 52 & 53 \\3 & 51 & 55 & 54 \\\hline\end{array}$$
Which one of the following statements is TRUE?

• A) Based on MAD, the exponential smoothing approach is more accurate.
• B) Based on CFE, the bias of the judgment forecasts is larger than the bias of the exponential smoothing forecasts.
• C) Based on MAD, the judgmental method is more accurate.
• D) Based on CFE, the bias of the exponential smoothing forecasts is steadily improving.

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