You Are Using an Exponential Smoothing Model for Forecasting

question 84

Multiple Choice

You are using an exponential smoothing model for forecasting. The running sum of the forecast error statistics (RSFE) are calculated each time a forecast is generated. You find the last RSFE to be 34. Originally the forecasting model used was selected because it's relatively low MAD of 0.4. To determine when it is time to reevaluate the usefulness of the exponential smoothing model you compute tracking signals. Which of the following is the resulting tracking signal?

• A) 85
• B) 60
• C) 13.6
• D) 12.9
• E) 8

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Definitions:

Operating Losses

Financial losses that occur when a company's operating expenses exceed its revenues during a given period, excluding gains or losses from investments or extraordinary items.

Stock Prices

The cost of purchasing a share of a company through the stock market, which fluctuates based on supply and demand.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity and operational efficiency of the business.

Loan Defaults

Occurs when a borrower fails to meet the legal obligations or conditions of a loan agreement.