EBK OM
6th Edition
ISBN: 9781305888210
Author: Collier
Publisher: YUZU
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Question
Chapter 4, Problem 13PA
Summary Introduction
Interpretation:
Expected value decision based on the technique used in decision analysis and evaluating whether this technique is reliable or not.
Concept Introduction:
The expected value method is also known by the name of expected monetary value (EMV). It is a decision making process in risk management to change the risk into the numbers which helps the experts to decide along with the risk regarding that decision. It also determines how much profit an individual can make by taking some certain decisions.
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Students have asked these similar questions
5-17 Data collected on the yearly demand for 50-pound bags of
fertilizer at Wallace Garden Supply are shown in the following
table. Develop a 3-year moving average to forecast sales. Then
estimate demand again with a weighted moving average in which
sales in the most recent year are given a weight of 2 and sales in
the other 2 years are each given a weight of 1. Which method do
you think is better?
YEAR
DEMAND FOR FERTILIZER (1,000s OF BAGS)
1
4
2
6.
3
4
4
LO
1 The demand for automobiles at Crescent Auto Dealers for the past 8 weeks is as follows.
Auto
Week
Demand
1
9.
2
11
3
8
4
12
5
10
13
7
7
8.
12
Develop a 3-week moving average forecast for Weeks 4 through 9
a
Develop a 3-week weighted average forecast for weeks 4 through 9
with weights of
d.
What is the Naïve forecast for Week 9?
Sarah has been custom manufacturing sweaters now for 7 years. Her annual sales are shown below.
Year
Sales
1
178
2
215
3
233
4
301
5
337
6
330
7
361
What are her forecasted sales for year 8 using a 5 year weighted average where w1=.4, w2=.3, w3=.15, w4=.1, w5=.05?
What are her forecasted sales for year 8 using exponential smoothing? Assume year 7 forecast was 323. Select your own alpha.
Which forecast method is the best for Sarah to use based on MAD? Why?
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