Question

Suppose that Bob's company uses exponential smoothing to make forecasts. Further suppose that last period's demand forecast was for 20,000 units (Ft) and last period's actual demand was 21,000 units (At). Bob's company uses a smoothing constant (alpha) of 0.4. What should be the forecast for this period

Answer 1

Answer:

20,400 units

Explanation:

Calculation to determine What should be the forecast for this period

Using this formula

F t+1=α*D t+(1-α)

Where,

F t+1=Forecast for this period

α=Smoothing constant (alpha)

D t=Last period's actual demand

(1-α)=(1-Last period's demand forecast)

Let plug in the formula

F t+1=(0.4*21,000 units)+(1-0.4*20,000 units)

F t+1=(0.4*21,000 units)+ (0.60*20,000 units)

F t+1=8,400 units+12,000 units

F t+1=20,400 units

Therefore What should be the forecast for this period is 20,400 units