An analyst is using exponential smoothing to forecast the daily demand for a key
ID: 2825335 • Letter: A
Question
An analyst is using exponential smoothing to forecast the daily demand for a key product. The analyst starts with a naive forecast for time period 2, then begins using exponential smoothing with a smoothing constant of 0.15. The table below shows some of the calculations. period actual forecast 1 125 2 136 125 3 144 126.65 4 157 129.25 5 181 ? What is the predicted demand for time period 5? Round your answer to two decimal places.
Period Actual Forecast 1 125 2 136 125 3 144 126.65 4 157 129.25 5 181 ?Explanation / Answer
The predicted demand for the time
actual is 181 for 5th period and smoothing constant is 0.15
forecast demand FT = FT-1 +$(AT-1 - FT-1 )
WHERE FT = NEW FORECAST DEMAND
FT-1 = PREVIOUS PERIOD FORECAST
$ = SMOOTHING CONSTANT
AT-1 = PREVIOUS PERIOD ACTUAL DEMAND
FT-1 = PREVIOUS PERIOD FORECAST
based in these = 129.25+0.5(157-129.25)
= 129.75 + 27.75
= 157.50
SO THE PREDICTED DEMAND FOR PERIOD 5 IS 157.50