If a Firm Produced a Product That Was Experiencing Growth

question 15

Multiple Choice

If a firm produced a product that was experiencing growth in demand, the smoothing constant alpha (reaction rate to differences) used in an exponential smoothing forecasting model would tend to be which of the following?

• A) Close to zero
• B) A very low percentage, less than 10 percent
• C) The more rapid the growth, the higher the percentage
• D) The more rapid the growth, the lower the percentage
• E) 50 percent or more

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Definitions:

Balance

The equality between the sum of the debits and credits in an account, or the stability between opposing forces.

Compounded Annually

Refers to interest calculated once a year on the principal, including any previously earned interest.

Balance

In mathematics, the state in which both sides of an equation or an inequality have equal values or weights.

Compounded Monthly

The process of applying interest on both the initial principal and the accumulated interest of previous periods on a monthly basis.