A pharmacist has been monitoring sales of a certain over-the-counter pain reliever. Daily sales

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QUESTION:

A pharmacist has been monitoring sales of a certain over-the-counter pain reliever. Daily sales during the last 15 days were

a. Which method would you suggest using to predict future sales—a linear trend equation or trend-adjusted exponential smoothing? Why?

b. If you learn that on some days the store ran out of the specific pain reliever, would that knowledge cause you any concern? Explain.

c. Assume that the data refer to demand rather than sales. Using trend-adjusted smoothing with an initial forecast of 50 for day 8, an initial trend estimate of 2, and α = β = .3, develop forecasts for days 9 through 16. What is the MSE for the eight forecasts for which there are actual data?


 

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