A Company Has Been Using Exponential Smoothing with an Alpha

question 106

Essay

A company has been using exponential smoothing with an alpha of .2 to forecast weekly truck sales.Given the data below,would a naive forecast have provided greater accuracy?
Explain.Assume an initial exponential forecast of 60 units in period 2 .

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Definitions:

Weighted-Average Method

A costing method that assigns inventory and cost of goods sold values based on an average of the costs of all goods available for sale during the period, weighted by quantity.

Conversion Costs

refers to the combined costs of direct labor and manufacturing overhead expenses in the production process, essential for transforming materials into finished goods.

Materials

The physical components or supplies used in the production of goods and services.

Conversion Costs

The costs associated with converting raw materials into finished goods, including labor and overhead but excluding the cost of the raw materials themselves.