The company you are working for is a manufacturer of household furniture in Queb

Question

The company you are working for is a manufacturer of household furniture in Quebec and exports to the global market. They have launched a new product line six months ago, a dining table with an artistic ‘inlay’. The first six months data has been made available and is listed below. The marketing department has researched the potential market and feel confident on a 30% growth rate over the next six months. The company policy has been to order the material Lot-For-Lot. This entails placing orders weekly. They are considering changing this policy to Fixed-Order Quantity.

With the data given:

                  Month                  Forecast                   Actual Demand

                           1                          260                                 238

                           2                          245                                 228

                           3                          251                                 239

                           4                          240                                 232

                           5                          256                                 235

                           6                         260                                 240

                           7                          ???

     a) Forecast the demand for month seven using exponential smoothing,

           the smoothing constant is 0.27.

Explanation / Answer

Here smoothing constant is 0.27

so,

F7 =

F7 = 0.27 * 240 + (1 - 0.27)* 260 = 254.6

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