Decision Science

December 2023 Examination

Solution Q. 1

Title: Investment Recommendation for Mr. Saproo Using Expected Monetary Values
(EMVs)

Introduction:

Mr. Rajinder Saproo, an investor with 10 lakh INR, sought the know-how of
MukulbhaiGadhecha, an investment expert based in Mumbai. Mukulbhai became tasked with
advising Mr. Saproo on the optimal investment choice given sure economic growth scenarios.
Mr. Saproo's notion of the financial landscape for the upcoming year became divided into
three procedures: 10% optimistic about 'true economic growth,' 50% confident about
'moderate economic increase,' and 40% happy about 'lower financial increase.' Mukulbhai
Gadhecha comprehensively analyzed potential payoffs for diverse investment alternatives
underneath these situations. The investment alternatives under attention had been Maruti
Suzuki shares, Tata Motor stocks, and D Mart stocks, each supplying exclusive returns
relying on the financial situation.

Choice Tree Diagram: To provide Mr. Saproo with clean and informed advice, we built a
decision tree diagram that visually represents the investment alternatives and the associated
chances of every economic scenario. The decision tree enables demonstrating the ability
outcomes and anticipated returns below one-of-a-kind instances. The following is a choice
Tree Diagram.

Investment Decision (10, 00,000 INR)

/ | \

/ | \
Good Economic / Moderate Economic \ Lower Economic

Growth / Growth \ Growth

10% (0.10) / 50% (0.50) \ 40% (0.40)

/ \ /

/ \ /

/ \ /

/ \ /

Mauti Suzuki Shares TATA Motor Shares D Mart shares

3, 00,000 (0.10) 4, 00,000 (0.10) 4,50,000 (0.10)

| | |

1, 20,000 (0.50) 1,00,000 (0.50) 2,30,000 (0.50)

| | |

50,000 (0.40) 10,000 (0.40) 30,000 (0.40)

The choice tree depicts Mr. Saproo's picks based totally on his to-be-had funding of 10,
00,000 INR and the probabilities assigned to each economic growth scenario. The three
investment options are laid out on the final degree of the tree, each with its respective returns
for 'true financial increase,' 'moderate financial growth,' and 'decreased financial increase.'

Expected Monetary Values (EMVs):

To decide the satisfactory funding decision for Mr. Saproo, we calculated the expected
economic Values (EMVs) for each funding option under every economic scenario. EMV is a
crucial choice-making device because it considers both capacity returns and their associated
possibilities. EMV is calculated as the sum of every possible final result's product and
probability.
Here are the EMVs calculated for each investment option:

Mauti Suzuki Shares:

EMV = (0.10 * 3, 00,000) + (0.50 * 1, 20,000) + (0.40 * 50,000) = 30,000 + 60,000 + 20,000
= 110,000 INR

TATA Motor shares:

EMV = (0.10 * 4, 00,000) + (0.50 * 1, 00,000) + (0.40 * 10,000) = 40,000 + 50,000 + 4,000
= 94,000 INR

D Mart shares:

EMV = (0.10 * 4, 50,000) + (0.50 * 2,30,000) + (0.40 * 30,000) = 45,000 + 1,15,000 +

12,000 = 172,000 INR

Recommendation:

Primarily based on the calculated EMVs for every investment choice, the excellent
investment preference for Mr. Saproo is D Mart shares. This feature gives the highest
predicted go-back for many of the three investment picks, with an EMV of approximately
172,000 INR.

D Mart shares align with Mr. Saproo's goal of maximizing ability returns even as thinking
about the related chance. This recommendation is made after a radical evaluation of the
predicted returns below various financial growth scenarios, as pondered inside the EMVs.

Conclusion:

In conclusion, while offering to invest his 10 lakh INR, Mr. Saproo must opt for D Mart
shares. This desire is supported by carefully considering probabilities and potential returns
for every funding option. Through specializing in D Mart shares, Mr. Saproo can function
himself to maximize his returns in keeping with his optimism about the monetary future, as
indicated by the probabilities he assigned to different economic growth scenarios.
However, Mr. Saproo must keep in mind that all investments bring some level of risk, and he
needs to continue to reveal market conditions and periodically review his investment
portfolio to make informed selections as situations change. This recommendation is primarily
based on the available information and the understanding of economic scenarios at the time
of the decision.

SOLUTION

The Quest for the Optimal Alpha:

Inside the realm of forecasting, we embark on a quest to unveil the alpha value that holds the
key to superior predictive powers. Our journey takes us through the dense forest of mean
Absolute Deviation (MAD) and the treacherous terrain of suggest-squared mistakes (MSE).
These metrics will be our guiding stars in this odyssey.

The Contestants:

Our noble contestants are alpha values—0.1, 0.2, 0.5, 0.7, and 0.9. each Alpha seeks to prove
its worth in the forecasting world, but only one shall emerge victorious.

Alpha = 0.1

(3)
(1) (2)
Exponential Smoothing
year Sales
(α=0.1)

1 977 977

2 1127 0.1⋅977+0.9⋅977=977

3 694 0.1⋅1127+0.9⋅977=992

4 1357 0.1⋅694+0.9⋅992=962.2

5 1020 0.1⋅1357+0.9⋅962.2=1001.68

6 1187 0.1⋅1020+0.9⋅1001.68=1003.512

7 866 0.1⋅1187+0.9⋅1003.512=1021.8608
8 1459 0.1⋅866+0.9⋅1021.8608=1006.2747

9 1163 0.1⋅1459+0.9⋅1006.2747=1051.5472

10 991 0.1⋅1163+0.9⋅1051.5472=1062.6925

11 1411 0.1⋅991+0.9⋅1062.6925=1055.5233

12 1323 0.1⋅1411+0.9⋅1055.5233=1091.0709

13 995 0.1⋅1323+0.9⋅1091.0709=1114.2638

14 1764 0.1⋅995+0.9⋅1114.2638=1102.3375

15 1552 0.1⋅1764+0.9⋅1102.3375=1168.5037

16 1465 0.1⋅1552+0.9⋅1168.5037=1206.8533

17 1398 0.1⋅1465+0.9⋅1206.8533=1232.668

18 1893 0.1⋅1398+0.9⋅1232.668=1249.2012

19 1422 0.1⋅1893+0.9⋅1249.2012=1313.5811

20 2063 0.1⋅1422+0.9⋅1313.5811=1324.423

21 1703 0.1⋅2063+0.9⋅1324.423=1398.2807

22 1758 0.1⋅1703+0.9⋅1398.2807=1428.7526

23 0.1⋅1758+0.9⋅1428.7526=1461.6774

(7)
(1) (2) (3)
(4) (5) (6) |
yea Sale Exponential
Error |Error| Error2 %Erro
r s Smoothing
r|

1 977 977

112
2 977 1127-977=150 150 22500 13.31%
7

3 694 992 694-992=-298 298 88804 42.94%

 135
4 962.2 1357-962.2=394.8 394.8 155867.04 29.09%
7

102
5 1001.68 1020-1001.68=18.32 18.32 335.6224 1.8%
0

118 1187-
6 1003.512 183.488 33667.8461 15.46%
7 1003.512=183.488

866-1021.8608=- 155.860
7 866 1021.8608 24292.589 18%
155.8608 8

145 1459- 452.725 204960.179

8 1006.2747 31.03%
9 1006.2747=452.7253 3 2

116 1163- 111.452

9 1051.5472 12421.7159 9.58%
3 1051.5472=111.4528 8

991-1062.6925=-
10 991 1062.6925 71.6925 5139.8179 7.23%
71.6925

141 1411- 355.476 126363.704

11 1055.5233 25.19%
1 1055.5233=355.4767 7 9

132 1323- 231.929

12 1091.0709 53791.0871 17.53%
3 1091.0709=231.9291 1

995-1114.2638=- 119.263
13 995 1114.2638 14223.8658 11.99%
119.2638 8

176 1764- 661.662 437797.310

14 1102.3375 37.51%
4 1102.3375=661.6625 5 9

155 1552- 383.496 147069.398

15 1168.5037 24.71%
2 1168.5037=383.4963 3 3

146 1465- 258.146

16 1206.8533 66639.6949 17.62%
5 1206.8533=258.1467 7

139 1398-
17 1232.668 165.332 27334.6664 11.83%
8 1232.668=165.332
 189 1893- 643.798 414476.881
18 1249.2012 34.01%
3 1249.2012=643.7988 8 4

142 1422- 108.418

19 1313.5811 11754.6602 7.62%
2 1313.5811=108.4189 9

206 2063- 545496.013

20 1324.423 738.577 35.8%
3 1324.423=738.577 8

170 1703- 304.719

21 1398.2807 92853.8625 17.89%
3 1398.2807=304.7193 3

175 1758- 329.247 108403.841

22 1428.7526 18.73%
8 1428.7526=329.2474 4 1

6136.40 2594193.79 428.88

23 1461.6774 Total
79 78 %

Forecasting errors
1. Mean absolute error (MAE), also called mean absolute deviation (MAD)
6136 . 4079
MAD= =292. 2099
21

2. Mean squared error (MSE)

2594193.7978
MSE= =123533.038
21

(3)
(1) (2)
Exponential Smoothing
year Sales
(α=0.2)

1 977 977

2 1127 0.2⋅977+0.8⋅977=977
3 694 0.2⋅1127+0.8⋅977=1007

4 1357 0.2⋅694+0.8⋅1007=944.4

5 1020 0.2⋅1357+0.8⋅944.4=1026.92

6 1187 0.2⋅1020+0.8⋅1026.92=1025.536

7 866 0.2⋅1187+0.8⋅1025.536=1057.8288

8 1459 0.2⋅866+0.8⋅1057.8288=1019.463

9 1163 0.2⋅1459+0.8⋅1019.463=1107.3704

10 991 0.2⋅1163+0.8⋅1107.3704=1118.4963

11 1411 0.2⋅991+0.8⋅1118.4963=1092.9971

12 1323 0.2⋅1411+0.8⋅1092.9971=1156.5977

13 995 0.2⋅1323+0.8⋅1156.5977=1189.8781

14 1764 0.2⋅995+0.8⋅1189.8781=1150.9025

15 1552 0.2⋅1764+0.8⋅1150.9025=1273.522

16 1465 0.2⋅1552+0.8⋅1273.522=1329.2176

17 1398 0.2⋅1465+0.8⋅1329.2176=1356.3741

18 1893 0.2⋅1398+0.8⋅1356.3741=1364.6993

19 1422 0.2⋅1893+0.8⋅1364.6993=1470.3594

20 2063 0.2⋅1422+0.8⋅1470.3594=1460.6875

21 1703 0.2⋅2063+0.8⋅1460.6875=1581.15

22 1758 0.2⋅1703+0.8⋅1581.15=1605.52

23 0.2⋅1758+0.8⋅1605.52=1636.016

(1) (2) (3) (4) (5) (6) (7)

yea Sale Exponential Error |Error| Error2 |
r s Smoothing %Erro
 r|

1 977 977

112
2 977 1127-977=150 150 22500 13.31%
7

3 694 1007 694-1007=-313 313 97969 45.1%

135
4 944.4 1357-944.4=412.6 412.6 170238.76 30.41%
7

102
5 1026.92 1020-1026.92=-6.92 6.92 47.8864 0.68%
0

118 1187-
6 1025.536 161.464 26070.6233 13.6%
7 1025.536=161.464

866-1057.8288=- 191.828
7 866 1057.8288 36798.2885 22.15%
191.8288 8

145 1459- 193192.739

8 1019.463 439.537 30.13%
9 1019.463=439.537 2

116 1163-
9 1107.3704 55.6296 3094.6488 4.78%
3 1107.3704=55.6296

991-1118.4963=- 127.496
10 991 1118.4963 16255.3181 12.87%
127.4963 3

141 1411- 318.002 101125.859

11 1092.9971 22.54%
1 1092.9971=318.0029 9 4

132 1323- 166.402

12 1156.5977 27689.7384 12.58%
3 1156.5977=166.4023 3

995-1189.8781=- 194.878
13 995 1189.8781 37977.4851 19.59%
194.8781 1

176 1764- 613.097 375888.540

14 1150.9025 34.76%
4 1150.9025=613.0975 5 6

15 155 1273.522 1552- 278.478 77549.9951 17.94%

 2 1273.522=278.478

146 1465- 135.782

16 1329.2176 18436.8596 9.27%
5 1329.2176=135.7824 4

139 1398-
17 1356.3741 41.6259 1732.7171 2.98%
8 1356.3741=41.6259

189 1893- 528.300 279101.666

18 1364.6993 27.91%
3 1364.6993=528.3007 7 3

142 1422-1470.3594=-
19 1470.3594 48.3594 2338.6328 3.4%
2 48.3594

206 2063- 602.312 362780.311

20 1460.6875 29.2%
3 1460.6875=602.3125 5 8

170
21 1581.15 1703-1581.15=121.85 121.85 14847.4167 7.16%
3

175
22 1605.52 1758-1605.52=152.48 152.48 23250.1446 8.67%
8

5060.04 1888886.63
23 1636.016 Total 369%
54 17

Forecasting errors

1. Mean absolute error (MAE), also called mean absolute deviation (MAD)

5060.0454
MAD= =240.9545
21

2. Mean squared error (MSE)

188888 . 6317
MSE=. =89946 .9825
21

Alpha = 0.5
 (3)
(1) (2)
Exponential Smoothing
year Sales
(α=0.5)

1 977 977

2 1127 0.5⋅977+0.5⋅977=977

3 694 0.5⋅1127+0.5⋅977=1052

4 1357 0.5⋅694+0.5⋅1052=873

5 1020 0.5⋅1357+0.5⋅873=1115

6 1187 0.5⋅1020+0.5⋅1115=1067.5

7 866 0.5⋅1187+0.5⋅1067.5=1127.25

8 1459 0.5⋅866+0.5⋅1127.25=996.625

9 1163 0.5⋅1459+0.5⋅996.625=1227.8125

0.5⋅1163+0.5⋅1227.8125=1195.406
10 991
2

11 1411 0.5⋅991+0.5⋅1195.4062=1093.2031

0.5⋅1411+0.5⋅1093.2031=1252.101
12 1323
6

0.5⋅1323+0.5⋅1252.1016=1287.550
13 995
8

14 1764 0.5⋅995+0.5⋅1287.5508=1141.2754

0.5⋅1764+0.5⋅1141.2754=1452.637
15 1552
7

0.5⋅1552+0.5⋅1452.6377=1502.318
16 1465
8

0.5⋅1465+0.5⋅1502.3188=1483.659
17 1398
4

18 1893 0.5⋅1398+0.5⋅1483.6594=1440.829
 7

0.5⋅1893+0.5⋅1440.8297=1666.914
19 1422
9

0.5⋅1422+0.5⋅1666.9149=1544.457
20 2063
4

0.5⋅2063+0.5⋅1544.4574=1803.728
21 1703
7

0.5⋅1703+0.5⋅1803.7287=1753.364
22 1758
4

0.5⋅1758+0.5⋅1753.3644=1755.682
23
2

(7)
(1) (2) (3)
(4) (5) (6) |
yea Sale Exponential
Error |Error| Error2 %Erro
r s Smoothing
r|

1 977 977

112
2 977 1127-977=150 150 22500 13.31%
7

3 694 1052 694-1052=-358 358 128164 51.59%

135
4 873 1357-873=484 484 234256 35.67%
7

102
5 1115 1020-1115=-95 95 9025 9.31%
0

118
6 1067.5 1187-1067.5=119.5 119.5 14280.25 10.07%
7

7 866 1127.25 866-1127.25=-261.25 261.25 68251.5625 30.17%

 145 213790.640
8 996.625 1459-996.625=462.375 462.375 31.69%
9 6

116 1163-1227.8125=-
9 1227.8125 64.8125 4200.6602 5.57%
3 64.8125

991-1195.4062=- 204.406
10 991 1195.4062 41781.915 20.63%
204.4062 2

141 1411- 317.796 100994.853

11 1093.2031 22.52%
1 1093.2031=317.7969 9 8

132 1323-
12 1252.1016 70.8984 5026.5884 5.36%
3 1252.1016=70.8984

995-1287.5508=- 292.550
13 995 1287.5508 85585.9596 29.4%
292.5508 8

176 1764- 622.724 387785.939

14 1141.2754 35.3%
4 1141.2754=622.7246 6 1

155 1552-
15 1452.6377 99.3623 9872.8676 6.4%
2 1452.6377=99.3623

146 1465-1502.3188=-
16 1502.3188 37.3188 1392.6964 2.55%
5 37.3188

139 1398-1483.6594=-
17 1483.6594 85.6594 7337.5369 6.13%
8 85.6594

189 1893- 452.170 204457.969

18 1440.8297 23.89%
3 1440.8297=452.1703 3 4

142 1422-1666.9149=- 244.914

19 1666.9149 59983.2867 17.22%
2 244.9149 9

206 2063- 518.542

20 1544.4574 268886.399 25.14%
3 1544.4574=518.5426 6

170 1703-1803.7287=- 100.728

21 1803.7287 10146.2738 5.91%
3 100.7287 7
 175 1758-
22 1753.3644 4.6356 21.4892 0.26%
8 1753.3644=4.6356

5046.64 1877741.88 388.09

23 1755.6822 Total
71 82 %

Forecasting errors

1. Mean absolute error (MAE), also called mean absolute deviation (MAD)
MAD =5046.6471 / 21=240.3165

2. Mean squared error (MSE)

MSE=1877741.8882 / 21=89416.2804

ALPHA = 0.7

(3)
(1) (2)
Exponential Smoothing
year Sales
(α=0.7)

1 977 977

2 1127 0.7⋅977+0.3⋅977=977

3 694 0.7⋅1127+0.3⋅977=1082

4 1357 0.7⋅694+0.3⋅1082=810.4

5 1020 0.7⋅1357+0.3⋅810.4=1193.02

6 1187 0.7⋅1020+0.3⋅1193.02=1071.906

7 866 0.7⋅1187+0.3⋅1071.906=1152.4718

8 1459 0.7⋅866+0.3⋅1152.4718=951.9415

9 1163 0.7⋅1459+0.3⋅951.9415=1306.8825
 0.7⋅1163+0.3⋅1306.8825=1206.164
10 991
7

11 1411 0.7⋅991+0.3⋅1206.1647=1055.5494

0.7⋅1411+0.3⋅1055.5494=1304.364
12 1323
8

0.7⋅1323+0.3⋅1304.3648=1317.409
13 995
4

14 1764 0.7⋅995+0.3⋅1317.4094=1091.7228

0.7⋅1764+0.3⋅1091.7228=1562.316
15 1552
9

0.7⋅1552+0.3⋅1562.3169=1555.095
16 1465
1

0.7⋅1465+0.3⋅1555.0951=1492.028
17 1398
5

0.7⋅1398+0.3⋅1492.0285=1426.208
18 1893
6

0.7⋅1893+0.3⋅1426.2086=1752.962
19 1422
6

0.7⋅1422+0.3⋅1752.9626=1521.288
20 2063
8

0.7⋅2063+0.3⋅1521.2888=1900.486
21 1703
6

22 1758 0.7⋅1703+0.3⋅1900.4866=1762.246

23 0.7⋅1758+0.3⋅1762.246=1759.2738

(1) (2) (3) (4) (5) (6) (7)

yea Sale Exponential Error |Error| Error2 |
 %Erro
r s Smoothing
r|

1 977 977

112
2 977 1127-977=150 150 22500 13.31%
7

3 694 1082 694-1082=-388 388 150544 55.91%

135
4 810.4 1357-810.4=546.6 546.6 298771.56 40.28%
7

102
5 1193.02 1020-1193.02=-173.02 173.02 29935.9204 16.96%
0

118 1187-
6 1071.906 115.094 13246.6288 9.7%
7 1071.906=115.094

866-1152.4718=- 286.471
7 866 1152.4718 82066.0922 33.08%
286.4718 8

145 1459- 507.058 257108.281

8 951.9415 34.75%
9 951.9415=507.0585 5 9

116 1163-1306.8825=- 143.882

9 1306.8825 20702.1629 12.37%
3 143.8825 5

991-1206.1647=- 215.164
10 991 1206.1647 46295.8647 21.71%
215.1647 7

141 1411- 355.450 126345.113

11 1055.5494 25.19%
1 1055.5494=355.4506 6 7

132 1323-
12 1304.3648 18.6352 347.2697 1.41%
3 1304.3648=18.6352

995-1317.4094=- 322.409 103947.852

13 995 1317.4094 32.4%
322.4094 4 1

176 1764- 672.277 451956.587

14 1091.7228 38.11%
4 1091.7228=672.2772 2 4
 155 1552-1562.3169=-
15 1562.3169 10.3169 106.4374 0.66%
2 10.3169

146 1465-1555.0951=-
16 1555.0951 90.0951 8117.119 6.15%
5 90.0951

139 1398-1492.0285=-
17 1492.0285 94.0285 8841.3619 6.73%
8 94.0285

189 1893- 466.791 217894.253

18 1426.2086 24.66%
3 1426.2086=466.7914 4 2

142 1422-1752.9626=- 330.962 109536.220

19 1752.9626 23.27%
2 330.9626 6 4

206 2063- 541.711 293451.056

20 1521.2888 26.26%
3 1521.2888=541.7112 2 8

170 1703-1900.4866=- 197.486

21 1900.4866 39000.9694 11.6%
3 197.4866 6

175
22 1762.246 1758-1762.246=-4.246 4.246 18.0284 0.24%
8

5629.70 2280732.78 434.76

23 1759.2738 Total
21 03 %

Forecasting errors

1. Mean absolute error (MAE), also called mean absolute deviation (MAD)
MAD=5629.7021 / 21=268.0811

2. Mean squared error (MSE)

MSE=2280732.7803 / 21=108606.3229

ALPHA = 0.9

(1) (2) (3)

 Exponential Smoothing
year Sales
(α=0.9)

1 977 977

2 1127 0.9⋅977+0.1⋅977=977

3 694 0.9⋅1127+0.1⋅977=1112

4 1357 0.9⋅694+0.1⋅1112=735.8

5 1020 0.9⋅1357+0.1⋅735.8=1294.88

6 1187 0.9⋅1020+0.1⋅1294.88=1047.488

7 866 0.9⋅1187+0.1⋅1047.488=1173.0488

8 1459 0.9⋅866+0.1⋅1173.0488=896.7049

9 1163 0.9⋅1459+0.1⋅896.7049=1402.7705

10 991 0.9⋅1163+0.1⋅1402.7705=1186.977

11 1411 0.9⋅991+0.1⋅1186.977=1010.5977

0.9⋅1411+0.1⋅1010.5977=1370.959
12 1323
8

13 995 0.9⋅1323+0.1⋅1370.9598=1327.796

14 1764 0.9⋅995+0.1⋅1327.796=1028.2796

15 1552 0.9⋅1764+0.1⋅1028.2796=1690.428

16 1465 0.9⋅1552+0.1⋅1690.428=1565.8428

0.9⋅1465+0.1⋅1565.8428=1475.084
17 1398
3

0.9⋅1398+0.1⋅1475.0843=1405.708
18 1893
4

0.9⋅1893+0.1⋅1405.7084=1844.270
19 1422
8

20 2063 0.9⋅1422+0.1⋅1844.2708=1464.227
 1

0.9⋅2063+0.1⋅1464.2271=2003.122
21 1703
7

0.9⋅1703+0.1⋅2003.1227=1733.012
22 1758
3

0.9⋅1758+0.1⋅1733.0123=1755.501
23
2

(7)
(1) (2) (3)
(4) (5) (6) |
yea Sale Exponential
Error |Error| Error2 %Erro
r s Smoothing
r|

1 977 977

112
2 977 1127-977=150 150 22500 13.31%
7

3 694 1112 694-1112=-418 418 174724 60.23%

135
4 735.8 1357-735.8=621.2 621.2 385889.44 45.78%
7

102
5 1294.88 1020-1294.88=-274.88 274.88 75559.0144 26.95%
0

118 1187-
6 1047.488 139.512 19463.5981 11.75%
7 1047.488=139.512

866-1173.0488=- 307.048
7 866 1173.0488 94278.9656 35.46%
307.0488 8

145 1459- 562.295

8 896.7049 316175.802 38.54%
9 896.7049=562.2951 1

9 116 1402.7705 1163-1402.7705=- 239.770 57489.8869 20.62%

 3 239.7705 5

10 991 1186.977 991-1186.977=-195.977 195.977 38407.0037 19.78%

141 1411- 400.402 160321.997

11 1010.5977 28.38%
1 1010.5977=400.4023 3 9

132 1323-1370.9598=-
12 1370.9598 47.9598 2300.1396 3.63%
3 47.9598

110753.162
13 995 1327.796 995-1327.796=-332.796 332.796 33.45%
3

176 1764- 735.720 541284.510

14 1028.2796 41.71%
4 1028.2796=735.7204 4 4

155 1552-1690.428=-
15 1690.428 138.428 19162.3 8.92%
2 138.428

146 1465-1565.8428=- 100.842

16 1565.8428 10169.2695 6.88%
5 100.8428 8

139 1398-1475.0843=-
17 1475.0843 77.0843 5941.9862 5.51%
8 77.0843

189 1893- 487.291 237453.076

18 1405.7084 25.74%
3 1405.7084=487.2916 6 2

142 1422-1844.2708=- 422.270 178312.664

19 1844.2708 29.7%
2 422.2708 8 7

206 2063- 598.772 358529.004

20 1464.2271 29.02%
3 1464.2271=598.7729 9 6

170 1703-2003.1227=- 300.122

21 2003.1227 90073.6401 17.62%
3 300.1227 7

175 1758-
22 1733.0123 24.9877 624.3866 1.42%
8 1733.0123=24.9877

6575.36 2899413.84 504.39

23 1755.5012 Total
27 88 %
Forecasting errors

1. Mean absolute error (MAE), also called mean absolute deviation

(MAD)MAD=6575.3627/21=313.1125

2.Mean squared error(MSE)

MSE=2899413.8488/21=138067.3261

Now, let's create a chart in MS Excel to visualize the MAD and MSE values for each alpha.
We will then discuss which alpha is relatively better for the forecast based on these metrics.
The Revelation:

As we examine the outcomes, two alpha values stand out as strong contenders: 0.2 and 0.5.
They reveal the lowest MAD and MSE values, signifying their prowess in forecasting
accuracy. These alphas have tested themselves to be reliable allies in our quest for precision.

The Concluding Remark:

Inside the grand forecasting arena, where accuracy is paramount, alpha values of 0.2 and 0.5
have emerged as champions. Their capacity to limit errors, each absolute and squared, makes
them the desired selections for the ones looking for the most reliable forecasts.
So, in the long run, the selection of alpha is obvious: permit 0.2 and 0.5 to lead the way in our
forecasting endeavors, as they've proven themselves to be the keys to unlocking the doors of
accurate prediction.

SOLUTION 3-A

To ascertain the chance of a randomly selected set of Mirchi lights from the production lot
surviving for 100 days, we delve into the world of records and regular distribution. With a
median life span (mean) of 90 days and a standard deviation of 10 days, we embark on a
journey to calculate this probability of the usage of the fascinating world of Z-scores and the
venerable traditional typical distribution desk.

Step 1: The Quest for the Z-Score

The Z-score, a numerical knight in shining armor, is our manual for understanding how far a
particular value ventures from the mean regarding general deviations. On this quest, we
searched for the Z-score for a Mirchi mild's endurance of 100 days. The Z-score reveals itself
through this incantation:

X−µ
Z=
σ

Where:

 X, the valorous value of interest, stands at 100 days.

 µ, the noble mean (average life span), holds steadfast at 90 days.
 σ, the trusty standard deviation, is a gallant 10 days

After invoking this magical formula, the Z-score emerges:

100−90
Z= =1
2
Step 2: The Revelation of Probability

With the Z-score at our side, we project to discover the opportunity concealed inside the
annals of a typical general distribution desk. This table, corresponding to an ancient
manuscript, unravels the secrets of probabilities associated with Z-scores.

Our quest is to unveil the probability that the Z-score is not only much less than one but
additionally identical to or under it (P (Z ≤ 1)). The standard ordinary distribution table, our
mystical oracle, famous that P (Z ≤ 1) is approximately 0.8413.

Thus, the revelation is clear: an enchanting probability of about 0.8413 exists, which
translates to 84.13%. That is the opportunity for a randomly chosen set of Mirchi lights from
the lot to endure gallantly for 100 days.

In summary, the journey through the enigmatic world of statistics unveils an approximate
84.13% chance. It foretells that a randomly selected assembly of Mirchi lighting from the
production lot shall withstand the take-a-look-at time and gleam for 100 days, guided by the
mean and preferred deviation of their life, and with the assumption of a normal distribution.

SOLUTION 3-B
 Stacked Bar
14000

12000

10000

8000

6000

4000

2000

0
I AR I
A AR OL AT UN AR AL AL RH AG AL SH
OR W W D W IT W A Y W G A
M SH AM PA A D IN H G A H NA K
A L
CH HR RI NA AR RA PR AR AR
GE A M
DE HA G O A G G H T T
BA CH
I TH DR I N U
UR PI RU HR SI
PA TE M
HA
UD

Micro Small Medium

Reasons for Choosing a Stacked Bar Chart:

Comparative Clarity: The number one objective is to offer a clear, visible assessment of the
contributions made by Micro, Small, and Medium enterprises to the overall range of MSMEs
in each district of Uttarakhand. A stacked bar chart excels on this, presenting those
contributions facet through side within each section. This visible contrast is crucial for
comprehending the distribution of MSME classes across the state.

Part-to-complete Visualization: Stacked bar charts inherently constitute the part-to-whole

relationship. Each bar in the diagram symbolizes a district's total range of MSMEs. Within
these bars, segments represent the 3 MSME classes - Micro, Small, and Medium. This
department simplifies how every type contributes to the overall number of MSMEs in a
particular district. It effectively breaks down the full into its constituent additives.

District-clever Insights: Uttarakhand is a country with various financial sports throughout

its districts. The stacked bar chart facilitates a district-wise contrast of MSME composition.
By examining the proportions of Micro, Small, and Medium corporations in each section,
stakeholders can benefit from insights into nearby versions of the types of businesses. Based
on this evaluation, Policymakers and strategists can tailor their strategies to different districts.

Clarity and Accessibility: Stacked bar charts are famous for their clarity and ease of
interpretation. They're intuitive and require minimal explanation. Each district is represented
as a single bar, and segments in the bars are frequently shade-coded for enhanced clarity.
This design ensures that the chart is out there and understandable to a broad target market,
irrespective of their familiarity with information visualization strategies. The visible
distinction through coloration coding significantly improves readability, enabling viewers to
differentiate between MSME categories effortlessly.

In conclusion:

The choice of a stacked bar chart as the desired visualization method for showing the
contribution of Micro, Small, and Medium organizations to the MSMEs in Uttarakhand is
underpinned by its suitability in numerous critical elements. It affords a clear basis for
comparative analysis, effectively communicates the part-to-whole relationship, facilitates
district-wise comparisons, and excels in phrases of clarity and accessibility. This decision
ensures that the facts are presented in an informative and understandable manner to a vast
audience, making it a super tool for conveying insights into the distribution of MSME
categories within the state.