The classified department of a monthly magazine has used a combination of quantitative and qualitative methods to forecast sales of advertising space. Results over a 20- month period are as follows:
a. Compute a tracking signal for months 11 through 20. Compute an initial value of MAD for month 11, and then update it for each month using exponential smoothing with α = .1. What can you conclude? Assume limits of ± 4.
b. Using the first half of the data, construct a control chart with 2s limits. What can you conclude?
c. Plot the last 10 errors on the control chart. Are the errors random? What is the implication of this?