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CMA Final · Strategic Cost Management · Business Forecasting Models - Time Series and Regression Analysis

Sales (units) for four years are 100, 120, 140, 160 with t = 1 to 4. Exponential smoothing with alpha 0.5 starts with the forecast for Year 2 equal to Year 1 actual. What is the forecast for Year 5?

The forecast for Year 5 is 142.5 units. Successive forecasts are 100, 110, 125 and then 0.5×160 + 0.5×125 = 142.5. None of the listed options matches this value.

  1. A145.0Correct
  2. B150.0
  3. C140.0
  4. D160.0

Explanation

F2=100. F3=0.5×120+0.5×100=110. F4=0.5×140+0.5×110=125. F5=0.5×160+0.5×125=142.5 — checking: 80+62.5=142.5. So the forecast is 142.5, not 145.

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