Calculate three forecasts using the following data.First,for periods 4 through 10,develop the exponentially smoothed forecasts using a forecast for period 3 (F3)of 45.0 and an alpha of 0.4.Second,calculate the three-period moving-average forecast for periods 4 through 10.Third,calculate the weighted moving average for periods 4 through 10,using weights of .70,.20,and .10,with 0.70 applied to the most recent data.Calculate the mean absolute deviation (MAD)and the cumulative sum of forecast error (CFE)for each forecasting procedure.Which forecasting procedure would you select? Why?
Definitions:
Net Operating Income
The income generated from normal business operations after subtracting operating expenses from gross profit.
Fixed Expenses
Costs that do not fluctuate with changes in production level or sales volume, ensuring stability in budget planning.
Cost-Plus Approach
A pricing strategy where a fixed percentage or fixed amount is added to the total cost of producing a product or delivering a service to determine its selling price.
Projected Selling Price
The anticipated price at which a product is expected to be sold in the future, considering factors such as cost, market demand, and competition.
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