SCENARIO 16-15-A
You Are the CEO of a Diary Company

question 87

Short Answer

SCENARIO 16-15-A
You are the CEO of a diary company. The total milk production (in gallons) from your company
over the past 30 years are presented below and also contained in the Excel file SCENARIO 16-
15-A.XLSX. $$\begin{array} { l r r r r r r r r r r r } \text { Year } & 1986 & 1987 & 1988 & 1989 & 1990 & 1991 & 1992 & 1993 & 1994 & 1995 \\& 1996 & 1997 & 1998 & 1999 & 2000 & 2001 & 2002 & 2003 & 2004 & 2005 \\& 2006 & 2007 & 2008 & 2009 & 2010 & 2011 & 2012 & 2013 & 2014 & 2015 \\\text { Milk } & 150201 & 172719 & 171357 & 157121 & 155727 & 152974 & 153443 & 158548 & 162614 & 164210 \\\text { Prod } & & & & & & & & & \\& 159127 & 153866 & 165992 & 177843 & 167477 & 163821 & 161700 & 170348 & 174105 & 185103 \\& 184670 & 173385 & 159695 & 173641 & 165706 & 171164 & 168706 & 150684 & 179314 & 163802\end{array}$$ You want to predict your company's future total milk production using the linear trend, quadratic
trend, exponential trend, first-order autoregressive, second-order autoregressive and third-order
autoregressive model.
-Referring to Scenario 16-15-A, what is the exponentially smoothed value for 1987 using a
smoothing coefficient of W = 0.25?

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Definitions:

Intra-Entity Transactions

Transactions that occur within the same legal entity, often between departments or divisions, which may require elimination during consolidation.

Net Income

The remaining profit for a company after deducting taxes and expenses from the revenue.

Consolidation Entry

A journal entry used in the preparation of consolidated financial statements to eliminate intercompany transactions and balances.

Retained Earnings

The portion of net income that is retained by the company rather than distributed to its shareholders as dividends.