You Are Using an Exponential Smoothing Model for Forecasting

question 10

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 re-evaluate the usefulness of the exponential smoothing model you compute tracking signals.Which of the following is the resulting tracking system?

• A)85
• B)60
• C)13.6
• D)12.9
• E)8

---

Definitions:

Accounting Break-even

The point at which total revenues equal total expenses, resulting in no net profit or loss for the business.

Project Net Income

The total earnings expected to be generated by a project after accounting for all expenses and taxes.

Operating Cash Flow

Money produced through a firm's regular operational activities, showing if the firm can produce enough positive cash flow to sustain and expand its business.

Forecasting Risk

This involves the uncertainty or the potential for deviation from expected financial or operational performance outcomes, particularly in relation to predicting future business activities.