Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 34

The Jersey Dairy Products Company produces cheese, which it sells to supermarkets and foodprocessing companies. Because of concerns about cholesterol and fat in cheese, the company has seen demand for its products decline during the past decade. It is now considering introducing some alternative low-fat dairy products and wants to determine how much available plant capacity it will have next year. The company has developed an exponential smoothing forecast with =.40 to forecast cheese demand. The actual demand and the forecasts from the model are as follows:
Assess the accuracy of the forecast model by using MAD and cumulative error. If the exponential smoothing forecast model does not appear to be accurate, determine whether a linear trend model would provide a more accurate forecast.