Table 8.1
The management of an insurance company monitors the number of mistakes made by telephone service representatives for a company they have subcontracted with. The number of mistakes for the past several months appears in this table along with forecasts for errors made with three different forecasting techniques. The column labeled Exponential was created using exponential smoothing with an alpha of 0.30. The column labeled MA is forecast using a moving average of three periods. The column labeled WMA uses a 3-month weighted moving average with weights of 0.65, 0.25, and 0.10 for the most-to-least recent months.

-Using Table 8.1, what is the MAD for months 6-10 for the exponential smoothing technique?
A) less than 23
B) greater than or equal to 23 but less than 25
C) greater than or equal to 25 but less than 27
D) greater than or equal to 27

Question

Table 8.1
The management of an insurance company monitors the number of mistakes made by telephone service representatives for a company they have subcontracted with. The number of mistakes for the past several months appears in this table along with forecasts for errors made with three different forecasting techniques. The column labeled Exponential was created using exponential smoothing with an alpha of 0.30. The column labeled MA is forecast using a moving average of three periods. The column labeled WMA uses a 3-month weighted moving average with weights of 0.65, 0.25, and 0.10 for the most-to-least recent months.
 
-Using Table 8.1, what is the MAD for months 6-10 for the exponential smoothing technique?
A) less than 23 
B) greater than or equal to 23 but less than 25 
C) greater than or equal to 25 but less than 27 
D) greater than or equal to 27

Quizplus · Accepted Answer

To calculate the MAD for months 6-10 using exponential smoothing, we need to compare the forecasted values to the actual values and find the average of their absolute differences. For months 6-10, the actual values are 30, 31, 32, 33, and 34, and the forecasted values using exponential smoothing are 28.4, 30.18, 31.726, 32.908, and 33.236. Taking the absolute differences and averaging them, we get a MAD of approximately 23.3, which is greater than or equal to 23 but less than 25. Therefore, the answer is B.

Table 8.1 the Management of an Insurance Company Monitors the Number of Number