Question

Please help in answering the following:

1. Exponential smoothing methods are sensitive to initial values for base, trend, or seasonal coefficients. It is very important to choose good starting values.

True

False

2. When using a moving average forecast, the last forecast that can be created using historical demand data is used for all future forecasts.

True

False

3. Which of the following demand patterns would you expect to see at your local gas station

Seasonality

Variability

All of these are correct

Trend

Autocorrelation

Answer 1

1: True

Since exponential smoothing resultsare highly dependednt upon starting values, they must be carefully selected.

2: False

In moving average the numbers used for calculations keep changing. Suppose it is a 3 year moving average, the last 3 years average is taken.

3: Variability

Gas demand may vary depending upon the weather or fuel prices. They are not seasonal demands neither do they show a specific trend.Under autocorrelation a time series data is influenced by its own historical values which is not so in case of gas demand.