The Exponential Smoothing Forecasting Technique Slowly Responds to Changes in the Mean

question 5

Multiple Choice

The exponential smoothing forecasting technique slowly responds to changes in the mean level of demand when

• A) a small alpha value is used.
• B) a large alpha value is used.
• C) an alpha value of 1.0 is used.
• D) size of the alpha value does not affect the responsiveness.

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Definitions:

Break-even Quantity

The volume of production or sales at which total costs equal total revenue, meaning there is no net loss or gain.

Fixed Costs

Expenses that remain constant regardless of production or sales volume, including rent, salaries, and insurance premiums.

Marginal Costs

The additional cost incurred by producing one extra unit of a product or service, crucial for pricing and production decisions.

Fixed Costs

Expenses that do not change with the amount of goods or services produced by a business.