find the appropriate production level for period 2 using a smoothing constant of 0.5:

Question

A company used a decision rule to determine production level in t – the period, as under:

P_t = P_t-1 + [A(F_t - P_{t – 1}0]

Where P_t, F_t denote production and forecast for t – the period and A is smoothing constant.

a) Given the information in the table below, find the appropriate production level for period 2 using a smoothing constant of 0.5:

Period t	Production level	Forecast
1 2 3	36000	42000 48000

 

b) Assuming that actual production for period 2 will be equal to the value as determined in case (1) above, determine the production levels for period 3 using (A) chase (B) level and (C) intermediate strategies.