Suppose That a Simple Exponential Smoothing Model Is Used (With $a$

question 29

Multiple Choice

Suppose that a simple exponential smoothing model is used (with $a$
= 0.40) to forecast monthly sandwich sales at a local sandwich shop.The forecasted demand for September was 1560 and the actual demand was 1480 sandwiches.Given this information,what would be the forecast number of sandwiches for October?

• A) 1480
• B) 1528
• C) 1560
• D) 1592

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Definitions:

Discount Rate

The Discount Rate is the interest rate that the Federal Reserve charges commercial banks for overnight loans. It influences liquidity and borrowing costs in the banking system.

WACC

Weighted Average Cost of Capital; a calculation of a firm's capital costs, weighted according to the proportion of equity and debt in the firm's capital structure.

Negative Net Present Value

An indication that the projected earnings (discounted back to present value) of an investment will be less than the initial investment cost.

Competitor's Cost

The expenses incurred by industry rivals, which can influence competitive pricing strategies.