Heidi Favors Using a Two Period Moving Average but Tim

question 42

Multiple Choice

Heidi favors using a two period moving average but Tim is "an exponential-smoothing man." Tim's demand forecast for May was identical to Heidi's.What value of alpha would Tim need to use in order for his June forecast to be identical to Heidi's if each sticks with their preferred technique?

• A) .085
• B) .196
• C) .237
• D) .348

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Definitions:

Useful Life

The estimated duration an asset is expected to be economically viable or productive.

Composite Depreciation Method

A method used to depreciate a group of assets that have different lives and uses as one single asset, applying a uniform depreciation rate.

Accumulated Depreciation

The total depreciation that has been recorded for an asset over its useful life.

Gain On Sale

The profit earned from the sale of an asset above its book value.