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Best is considering using a basic exponential smoothing model with α = .2 to forecast capacity (see Chapter 2, if forecasting knowledge is limited).

a. Use the sales average of 480 through December 2012 as the forecast for January. Prepare capacity forecast for February through April at the end of January.

b. Calculate the average error and Mean Absolute Deviation (MAD) for the three forecasts using the actual capacity data provided. Estimate the standard deviation of the calculated MAD.

c. Redo the capacity forecast and MAD calculations, updating the forecast for February through May and June and updating the forecast at the end of March and April.


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